Signs of a Changing Sydney Market - Aug 2024

By Rich Harvey, CEO & Founder, propertybuyer.com.au

For decades, the New South Wales Central Coast region was in a property market holding pattern. It was flying under the radar of homebuyers and investors alike. But COVID’s significant upheaval brought the region into the limelight. Now, a raft of drivers across the political and economic spectrum will deliver exciting times to the Central Coast – and those who own property will be among the biggest beneficiaries.
Anthony Knight, Principal buyers’ advocate for Propertybuyer on the Central Coast, has lived in the region for decades. We recently chatted about the region and why he’s excited about what’s to come.

Each and every day, buyers’ agents turn to a variety of different sources to determine where the property market is sitting.

I’m not just talking about an entire city’s market either, with the extent of the research I conduct drilling down to a suburb level. After all, there’s no single Sydney market, but rather a number of micro markets within it, each driven by their own unique factors.

Much of the data I access isn’t stuff you’ll find freely available - and rarely for free - on the internet. It comes via research houses who employ specialist economists to pore over numbers to get a sense of how things are tracking. Plus my team are gleaning highly localised insights as they mix with agents and buyers at open houses and auctions.

But there is a wealth of information out there that can help you gain valuable insights into what’s happening in Sydney right now.

How vendors feel

When would-be sellers sit on their hands and resist coming to market, it constrains supply and leaves buyers with less to choose from. If demand is strong at the same time, then there’s upward pressure placed on prices.

That’s the kind of scenario we’ve seen in large parts of Sydney over the past few years - a whole lot of buyers, not many homes (high demand- low supply).

Often, when there’s an uptick in selling activity, it means that vendors feel buoyed by what they’re seeing and want a slice of the action. But occasionally, it could also be an indication of mortgage stress driven by interest rate and economic pain. Similarly, a drop in listings could indicate there’s a sense of nervousness about being able to find a buyer and a good price.

From a buyer’s perspective, lots of new listings means you’ll have more to choose from, competition could be less intense, and there might be less of an uplift in price. Fewer listings means delivers you the exact opposite scenario.

The latest data from PropTrack shows the number of new listings across Sydney in June fell 15.6 per cent compared to May. It’s worth pointing out that winter is a notoriously quiet time of year, and the result was 7.8 per cent higher compared to June 2023.

Total listings, that is the number of homes on the market across the board - not just new additions - fell 3.6 per cent in June compared to May, which is a modest movement. They’re up a healthy 16.9 per cent year-on-year though, so those shopping for a home now have much greater choice than those looking in mid-2023.

How auctions are doing

How busy each Saturday’s auction scene is can be another indication of where the market is heading.

Lots of auctions means vendors are confident and there’s a good level of buyer demand there to justify the cost and angst of letting a home go under the hammer. But there are seasonal factors that can impact numbers, like the slow winter period, public holidays and even the football finals.

CoreLogic crunches the number each week on both the number of homes heading to auction in the weekend ahead, as well as how many successfully sold on the Saturday prior.

For example, for the first Saturday in August, 627 auctions were scheduled across Sydney, which was down from 721 the week prior and 692 over the same weekend in 2023.

That quieter trend was replicated across much of the country, so it wasn’t just localised to the New South Wales capital. Again, winter plays a part, but the strength of previous weeks as well as the year-on-year comparison does raise some interesting questions.

So too does the auction clearance rate data for that weekend.

Of the homes that went to auction on August 3, 69.4 per cent sold under the hammer. That compares to 74.5 per cent the week before but is up on the same weekend last year, when the clearance rate was 63.4 per cent.

It was the first time the clearance rate in Sydney fell below 70 per cent since the King’s Birthday long weekend in June.

How prices are moving

Domain figures show that Sydney has shown a general price increase of 7.8% over FY24 and now has a median price of over $1.66m. This shows the ongoing and remarkable resilience of Australia’s peak city for capital growth in spite of higher interest rates.

Monthly updates on home price movements gives an updated measure of how the market is moving.

In July, home prices at a national level rose by 0.5 per cent, marking the 18th consecutive monthly increase, according to CoreLogic. That seems like pretty solid news. But behind the headline figure are some curious trends.

For starters, three capital cities saw home prices slip over the past three months - Melbourne by 0.9 per cent, Hobart by 0.8 per cent, and Darwin by 0.3 per cent. There are local factors at play there, but widespread falls in prices can also be indicative of trends that could flow on to Sydney.

And it seems they are. For the three months to July, price growth in Sydney showed clear signs of moderation. Home prices increased by 1.1 per cent in the quarter, which is positive but a world away from the five per cent gain seen at the same time in 2023.

Of course, individual suburbs are performing better than others across Sydney. A good buyer’s agent can give you access to insights for every area in the city and where prices are sitting.

For example, in the popular inner-western suburb of Strathfield, the median house price based on all sales in July was $3.82 million, while a month earlier it was $3.63 million.

How buyers feel

Getting a sense of how buyers feel can give you insight into potential shifts in market momentum.

There’s auction clearance rates and price movements, which buyer demand and sentiment obviously help to drive, but there are other indications.

Lending data from the Australian Bureau of Statistics for June shows new home loan commitments rose 1.3 per cent in the month and were up 19.1 per cent compared to the same time last year.

That shows people are still taking out mortgages to fund their property purchases, so momentum is still there.

At a suburb level, it’s possible to get a sense of how many buyers are actively searching in a particular suburb. A good buyer’s agent can get data on an individual area’s total listings, how many days on average a home takes to sell, and how many people are looking in the suburb.

For example, going back to Strathfield again, the median time on market for a house is 45 days and there are about 3500 interested buyers sniffing around the area.

That’s just the start

There’s plenty of information that can be sourced to give a sense of how markets are behaving.

At a broad level, there are lending statistics on how many mortgages are taken out each month and by what type of buyer, be it owner-occupier or investor, and how this compares to last month and last year.

There’s information on the number of mortgage holders are in a state of distress, as well as by how much.

Attending multiple open houses in the local suburb and observing the volume of people inspecting also gives a good indication of demand for the local market.

For those interested in investing, there are vacancy rates - that is, the proportion of all leased dwellings currently available - and average yields.

There’s data on how many new housing developments have been approved, how many have commenced construction, and how many have been completed, offering insight into potential new supply surges.

You can even find information about how many foreign buyers are eyeing off Aussie properties and where they’re looking.

Working with a really good buyer’s agent doesn’t just get you someone who takes care of sourcing a home, negotiating its purchase and seeing the entire process through, but a property expert with access to some incredible research and data.

How to use this

When you’re in the market for a home or an investment, it pays to know what’s happening on the ground so you can make the most informed decision possible.

Researching the market at a national, capital city and local level will help you to paint a full picture of supply, demand and prices. You can capitalise on that knowledge by either acting with purpose or taking your time to shop around. It could help dictate how aggressive you are in negotiations and what kind of price premium - or discount - you could be in for.

On top of all this, and most importantly of all, working with an experienced and knowledgable buyer’s agent can open up even more information that gives you an inside edge.

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