There has been much talk about the slowing Sydney housing market, especially over the past week, where it has become apparent that auction clearance rates have fallen.
Our take on the recent weekly auction clearance information in the market is that it is indeed a strong indicator that the Sydney market is slowing. The evidence is more apparent and compelling when considering what the market was doing this time last year. Back on the weekend of September 27 2014, APM recorded a revised auction clearance rate of 76.9%. That result was based on 722 listings. The preliminary result this weekend of 69.6% is unmistakably lower with more listings on the market (984). The revised number issued next weekend will likely bring this result down to about 67%.
Now what does a clearance rate of the high 60's mean for this time of year? Well let me tell you now, it most certainly doesn’t represent a “bloodbath” as some unqualified commentators have put out there this year. And neither does it represent a boom. Rather it represents more normal market activity.
For the record, the long term average auction clearance rate for Sydney during spring has been in the order of the low 60's.
It should be noted that auction clearance rates tend to fall each spring. The reason why is that there is a seasonal surge in property listings at this time of year. As far as I can remember, and looking at the historical data, auction clearance rates have fallen in each and every year during spring (compared to Autumn/Winter) except for I think, one year. For some reason, vendors think spring time is a great time to sell. Perhaps they think their garden is looking fabulous right now. Perhaps they wish to tie up affairs prior to Christmas. Whatever the reasons given, many vendors think this way and therefore it’s not such a great time to sell as everyone else is selling! No wonder they call it the spring selling season!
Certainly, there is little evidence there are more buyers in spring. If anything, the data suggests that buyers tend to come out in early autumn through to early winter. I am not sure how many times I have pointed out the spring effect to the public over the past 15 years, but sure enough, I know I will be repeating myself again with the same facts 15 years from now!
Nevertheless in all this, we do acknowledge a slowing in the market. However I do not believe at this stage the Sydney market is close to correction territory. I would not be concerned on that event until we see clearance rates below 60%. That hurdle rate has served us well in the past, particularly in predicting the 2010-2012 downturn.
That’s all I will say for Sydney right now. I’ll save our forecasts for our imminent release of our 2016 Housing Boom and Bust report. Normally it’s out by now but with the ABS now lagging in its reporting of the quarterly price data, it has delayed us a little. We have had many enquires this week about the impending release. And thank you for those enquiries. It’s nice to know the report is wanted. Bloodbaths or not, we promise to deliver within two weeks from now.
Any expressed market opinion is my own and is not to be taken as financial advice
Oh But Dragon, there's not much room for hot air..
There's bigwigs like Treasury Secretary John Fraser told the Senate estimates committee hearing way back in late May that Sydney is " unequivocally " in a house price bubble .. But prices still went up... However that handsome John McGrath who understands how that motza was made in those historical boom times... Is calling the general market as being as close to the peak...
Well those happy are those who have seen some incredible property price changes over the long term . Such a hard life for some I suppose when there's bubble phobia.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$ It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do. Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
Louis Christopher, like much of the commetariat, likes to imagine his analysis as if 69% auction clearances have been 69% for the last 200 weeks. In fact clearances are on a steep downward line, and its the line, rather than last week's percent, that is the thing of interest.
Louis Christopher, like much of the commetariat, likes to imagine his analysis as if 69% auction clearances have been 69% for the last 200 weeks. In fact clearances are on a steep downward line, and its the line, rather than last week's percent, that is the thing of interest.
The Sydney auction clearance rate has been on a steep downward line to 69% on four separate occasions over the past two years.
Bears need to wait until it drops to 50% before they start celebrating.
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