Is Sydney experiencing a second coming?
One of Australia's most recognisable real estate names is claiming recent auction results show Sydney’s boom is far from over, while a high-profile buyer’s agent has labelled investors still considering the harbour city “absolutely crazy”.
Last weekend’s auction clearance result of 74 per cent in Sydney (according to APM PriceFinder) is a sign the city’s four-year run of price growth is far from over, according to Raine & Horne executive chairman Angus Raine.
Mr Raine cited decreased listings and untempered buyer demand as the chief reasons behind the strong result, advising prospective sellers to finalise their listing in the six weeks to Easter.
“The weekend auction results are great news for those considering listing a Sydney property, especially with fewer properties going under the hammer than midway through 2015.
“While overall listings in Sydney are down by almost 15 per cent compared to the same time last year, on the demand side there are plenty of buyers and investors who have decided to return to the market for a second shot at buying an investment or owner-occupied property having missed out in 2015,” he said.
James Pratt, director of Raine & Horne Auction Services, believes the end of the holiday period is also helping to boost demand, predicting the Sydney market will continue to contradict recent predictions that the city has already reached its peak.
“Now the holiday season is over and the kids have returned to school owner occupiers and investors are back looking to secure a suitable Sydney property,” said Mr Pratt.
“The auction clearance rates last weekend also demonstrate that the Sydney property market will continue to buck expectations and that its four-year reign as the heavyweight Australian real estate market is far from over.”
But the strong result on the weekend shouldn’t be taken as a sign of the market’s strength, according to buyer’s agent and director of wHeregroup Todd Hunter, who explained that agents in Sydney’s outer suburbs have been struggling for some time to replicate previous results.
“You can’t take one week of auction clearance rates as gospel, you’ve got to start seeing a trend. I’ve spoken to a good mate who is an agent near Campbelltown and had an auction this week that hit 50 per cent.
“Word from him was ‘These days at auction, if we get one buyer for the property, that’s great’. Twelve months ago you had four buyers, there were three or four buyers fighting for the property. Now it’s a matter of trying to snag one buyer to get them at auction to bid at it. So I don’t think last weekend is any indication; I just think it’s a one-off or maybe even over one or two weeks, but I don’t think it’s going to be a trend at all,” Mr Hunter said.
Mr Hunter explained that while house prices and sales activity won’t see any further rises, prices are likely to remain stagnant until a substantial interest rate rise triggers a significant correction.
“It won’t be anything dramatic until we see interest rate rises, which is nowhere in the foreseeable future at the moment,” he said.
That means investors would be “crazy” to consider a purchase in Sydney at this point in time.
“You’re crazy if you do. Outside of a love purchase, buying your home or wanting to sell your home and buy another home … if you’re looking to invest, you’re crazy to buy an investment property in Sydney now... absolutely crazy," he said.
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