August 2015 - Sydney Market Nearing Turning Point
By Rich Harvey, Managing Director propertybuyer
Will APRA’s rules slow the market and are auction rates slipping? With Sydney’s’ property market making the headlines regularly this month we look at what’s trending and where the market is heading. Check out our recent stories and the seminars being hosted next week and PLEASE vote for us in the readers’ choice awards.
In this edition we look at:
- Sydney market nearing turning point
- Rich elected President of REBAA
- Seminars - Strategies for Buying, Tue 18th & Wed 19th August
- Vote for us - Readers Choice Awards
1. Sydney Market Nearing Turning Point
Reading the tea leaves on the Sydney Property market is not rocket science. Clearly the rate of double digit price growth will slow at some point to match up with the fundamentals of affordability.
Low interest rates has driven significant investor activity and pent up home buyer demand has led to records being regularly broken in every suburb. The last interest rate cut in May of 0.25% by the RBA has been quickly swallowed up by the Banks responding to new APRA guidelines to reprice their loans for higher capital risks. Some banks have increased rates from 0.27% while AMP increased their rates 0.48%. There is still some potential that the RBA may cut rates further to stimulate a sluggish economy trying to transition out of the resources sector decline.
Where is the property cycle at in Sydney compared to the rest of Australia? Domain Group said we passed the magic million dollar median house price in July. Residex put the median house value at $993,500 while RP Data estimate $900,000 (each company uses a different methodology).
On the ground at auctions and open for inspections we are still seeing plenty of buyers competing for limited stock. In the Sydney market it only takes on average 26 days to sell a house according to RP Data. The days on market is an average measure of speed and demand in the market. Over the past 12 months we have also seen listing volumes contract around 15% across the market. So the potent combination of reduced supply, high demand and low interest rates has resulted in a highly competitive market.
I believe growth will moderate over the next 12 months to around 4% to 6% pa. Double digit price growth is just not sustainable. However the fact that long term interest rates are very stable suggests that the market will not burst but simply flatten out over time before it goes through the next cycle.
If you are considering selling your home, I would seriously recommend doing this sooner than later as the Spring market will provide a good opportunity to capitalise on a robust market. For home buyers, Spring will bring a host of new listings to market which will enhance your scope of choice.
Property investors face some challenges in getting finance for their next loan as the banks have significantly tightened lending criteria and also removed some of the discounts previously offered on investor loans. However, serious investors should not be deterred by these changes as there are always good opportunities in any market – whether rising, falling or going sideways. The fact that the banks are more closely scrutinising lending applications is actually a very positive step for the whole property market as it helps eliminate speculative investing and improves the quality of loans. It means money is being lent to those with the capacity to repay. When interest rates inevitably rise these investors should be well positioned to cope with the changes.
Auction clearance rates during July were generally above 80%, but last weekend saw the first dip to 75% in August. However, the volume of auctions has dramatically increased this year. But don’t put too much credence on auction rates to judge the entire health of the market. Of the total listings for sale each week in Sydney only around 33% are sold via auction while the rest are sold via private treaty.
We have had a good range of enquiry from buyers last month:
- Home buyers seeking homes in the Eastern suburbs, North Shore, Northern Beaches, Inner West, North West and South West. Homes near good schools and transport links is a common request.
- Investors seeking high growth and positive cashflow properties. Sydney still holds promise for long term capital growth but you need a bigger budget to get in these days. For those seeking higher yields we are active in Newcastle, Brisbane and other areas that deliver both growth and yield from a lower price point.
- Commercial – We have assisted several business owners find new premises for their operations and also some investors seeking a stable income from a commercial asset.
- SMSF – many smart buyers are using the SMSF to invest in property. Yes there is a little more paperwork to do, but the tax advantages long term are absolutely excellent.
- Developers – Our development specialist Pete is busy chasing duplex and townhouse sites for some active developers and found some excellent opportunities in the Sydney market.
- Prestige buyers – we have several local buyers and expats seeking to get a foothold in the prestige market from $3m to $25m+. Last week we viewed several off market homes in Point Piper and surrounds with stunning harbour views.
Call our friendly team today on +61 2 9975 3311 or email your wishlist to discuss your requirements to give you the edge in this competitive market and put you at the front of the property buying queue.
Rich Harvey is founder and Managing Director of www.propertybuyer.com.au, Australia's most awarded Buyers' Advocates. Propertybuyer helps property investors and home buyers search and negotiate the right property at the right price, everytime. Visit www.propertybuyer.com.au or call 1300 655 615.
2. Rich Elected President of REBAA
Propertybuyer Managing Director Rich Harvey has been elected president of the Real Estate Buyers Agents Association of Australia (REBAA), the peak body representing professional buyer’s agents.
REBAA is the leading professional association for buyers' agents nationally. REBAA was founded in 2000 to raise the profile of buyers’ agents nationally and to establish guidelines for the professional conduct of real estate buyers’ agents.
Mr Harvey also serves on a voluntary basis to improve standards within the buyers’ agents industry as the Chairman of the Buyer’s Agent Chapter of the Real Estate Institute of NSW.
According to Harvey, in Australia buyer’s agents are growing in awareness as time-poor property hunters slowly learn the benefits of having an independent expert on side to search, evaluate and negotiate property purchases on their behalf.
Mr Harvey said better licensing requirements and training for buyer’s agents would be a key focus for the association moving forward.
“This year REBAA celebrates 15 years as an association and our membership continues to grow steadily,” he said.
“There is a risk of lack of due diligence, as well as a risk of overpaying, without the correct knowledge and experience.
“Whether in a hot market like Sydney, or growing market like Brisbane, a buyers’ agent protects the consumer from the vagaries of the market place.
“Our main focus is to educate and promote good buying practices to consumers and bring together like-minded professionals who share the same commitment to ethics and industry best practice."
3. Seminars - Strategies for Buying & Selling in Today's Property Market
Sydney’s market is so hot that buying a property today is a nightmare for the average home buyer. Have you missed out at auction several times and become tired of endless searching to find that “right” property? Are you confused by price guides that bear no resemblance to end sales price?
Discover the secret weapon to buying real estate and the seven steps you need to take to secure your dream home and beat the competition.
- How to research the market and find your home faster
- What’s really happening in the Sydney market – where will prices head from here?
- How to be prepared to buy quickly
- The optimal timing for buying and selling
- How to uncover off-market opportunities
- Negotiating with agents
- Case studies
You will come away with practical tips and strategies to make the buying process a breeze.
This presentation will be followed by 'Successful Property Investment via Superannuation' with Matthew Collins, Director, Financial Decisions Australians have an insatiable appetite for owning real estate – they love bricks and mortar. Imagine if you could grow your property portfolio by paying back your property debts over 30% faster. Leading financial services expert, Matt Collins, will provide insights into how you could use your superannuation to fast track the repayment of your property debt compared to direct property investments.
Free Event. Two nights only at Manly or Lane Cove:
TUESDAY, 18th AUGUST 7.00pm - 8.30pm
Stone Real Estate Lane Cove, 144 Longueville Road Lane Cove
WEDNESDAY, 19TH AUGUST 7.00pm - 8.30pm
Stone Real Estate Seaforth/Manly, 10 Darley Road Manly
Tel: 9975 3311
4. Please Vote For Us - Readers Choice Awards
The annual Reader’s Choice Awards organised by Your Investment Property in partnership with Core Logic RP Data recognises Australia’s best property service providers – as voted by the customers.
Voting is now open and closes August 31st.
As a client recently note: "for many reasons, I have voted for propertybuyer and I wish you all the very best as with professionals like yourself deserve to win."
By nominating propertybuyer for the Readers Choice Awards, you are having your say and showing your support behind our team.
What's more, 5 lucky voters have a chance to win a prize pack worth over $2,410! Including:
* 12 month subscription to Property Value. Valued at $399
* 12 month membership to NMD Data. Valued at $199
* 12 month membership to Real Estate Investar’s Portfolio Manager. Valued at $828
* 12 month subscription to Your Investment Property magazine and a selection of YIP’s bestselling special reports and eBook. Valued together at $984
Please nominate us today - and make your voice heard.