The property market in Sydney’s East has been relatively weak for around a year and a half now. However, there are early signals that’s beginning to change and that a new set of conditions are taking hold, underpinned by a small increase in median prices.
We explore where the property market is at right now and what we forecast may happen for the remainder of 2019.
BUYERS RETURNING TO THE MARKET
In early 2019, the Eastern suburbs property market was characterised by low buyer levels and falling prices. We put this down to a lack of certainty about future economic conditions, as well as to general concern about a Labor win in the federal election and what their policies on CGT and negative gearing would mean for property prices. It was further fuelled by the banks applying tougher lending criteria, meaning buyers simply couldn’t borrow as much as they once could.
Now we’re seeing a different set of conditions altogether, with two interest rate cuts in two months and APRA amending its guidance to banks on mortgage lending so that homebuyers may potentially be able to borrow more. Perhaps even more important to market confidence, however, was the emphatic return of the Morisson government, which, after a decade of changing Prime Ministers, could herald a new era of stability at the federal level.
In June 2019, we started seeing more buyers at open homes, more serious offers being made on property and generally much greater confidence in the fundamentals of the Eastern Suburbs market. This led to the end of sliding Sydney dwelling prices, which recorded a small increase for the first time since November 2017.
LOW STOCK LEVELS CURRENTLY HOLDING MARKET BACK
The one thing missing from the Eastern Suburbs property market right now is stock. There are simply not enough properties for sale.
For buyers, this means there is less property to choose from, so the chances of finding the perfect home – or anything approaching the perfect home – is diminished. While that may sound like the perfect market for sellers, it’s not. Sellers usually also need somewhere to live and currently, they’re finding it difficult to nail down a next property they really want to call home. This prevents them from listing in the first place, and so the cycle of low stock continues, pleasing no one.
EXPECT SPRING TO BRING A CHANGE TO THE STATE OF THE PROPERTY MARKET
When stock levels start to improve, people considering making a move start to find properties they like. This causes them, in turn, to list their own home. In other words, more property transactions fuel even more property transactions.
We expect the market to kick off in Spring. Already, we’re seeing more people seeking appraisals of their home with a view to selling later this year. We believe this will translate into more open homes, more auctions and generally more urgency among buyers.
While the market will be more buoyant, we don’t expect massive price gains, because we believe the market has, to some extent, found its level.
THE MARKET IN EASTERN SUBURBS APARTMENTS TO LEAD THE MARKET
Interestingly, the segment in which we’re noticing the biggest difference is the market in apartments and entry-level homes. This is the part of the market that led us into the property slump after the banks tightened lending criteria and people found it more difficult to get a loan.
Now we’re seeing a real increase in the number of investors and first home buyers, who find they can both potentially borrow more and repay a loan more easily. They’re also starting to see better value in the market than for some time.
The downsizer market also remains strong. These buyers often demand a level of quality and convenience that previous generations haven’t and when a property can meet their criteria, it becomes hotly contested.
For example, a property with solid downsizer appeal we sold recently was 6/16 Benelong Crescent, Bellevue Hill, which was set in a boutique development of just six apartments and offered lift access and house-like proportions.
WHAT THE CURRENT MARKET MEANS FOR YOU
If you’re thinking of selling, there is strong demand in some sections of the market right now and it is better to get in early before too much property comes onto the market.
For buyers, take heart in the fact that property prices are neither falling nor rising too sharply. Although stock levels are low, if you find a home that suits you, it is a good time to make a long-term purchase. After all, prices are still down around 15% from their 2017 peak. Chances are they will return to it over the next few years.
If you’d like more information on the current state of the market, please contact us.
- Posted by The Goldman Brothers
- On July 23, 2019
- 0 Comments