Ingrid Fuary-Wagner | Australian Financial Review | 30 June 2019
Cashed-up buyers who have been biding their time and waiting out the downturn are now starting to make their move as selling agents report an influx of inquiries, more people through open homes and stronger competition at auctions, albeit it with very few properties to choose from.
Results collated from the last five weeks show June has been the strongest month for auctions in Sydney since September 2017 and February 2018 for Melbourne, according to economist Shane Oliver of AMP Capital.
“The momentum has well and truly improved. It does look like the market bounce since the election, the rate cut and APRA talking about relaxing its serviceability test is continuing,” he said.
“There are still lots of question marks given low volumes and high unreported results but while the headline numbers tend to be exaggerated, even when you adjust for that, it’s still almost certainly the best month for Sydney in a long time.”
Melbourne has shown more robust signs of a market turnaround compared to Sydney in recent weeks, with a higher preliminary clearance rate of 73.2 per cent over the weekend from a slightly larger pool of 463 auctions and more reported results from selling agents.
According to Domain’s collection results, 67.6 per cent of properties sold under the hammer in Sydney on Saturday from 428 scheduled auctions. However, almost 40 per cent of sales results were not reported, so the final auction clearance rate is expected to fall to around 60 per cent. Last week, 55 per cent of Sydney properties scheduled for auction sold.
“The Melbourne market is still a lot stronger than Sydney. It never came down as much and it’s now recovering faster,” Mr Oliver said.
The reasons are twofold, according to Mr Oliver, who said there were fewer apartments hitting the Melbourne market at the same time as strong population growth.
In Melbourne on Saturday two investors battled it out for a newly renovated two-bedroom unit at 4/70 Patterson Street in Middle Park which sold for $730,000 – $30,000 over reserve. It was bought just 12 months ago for $670,000.
“There were two parties interested and both investors, which is good to see,” selling agent Melanie Walden, of McGrath said.
“With interest rates so low, we are starting to see investors move back into the market. The apartment market is really outperforming the housing market,” Ms Walden said.
Buyer’s agent David Morrell said in the past eight weeks he’d noticed a positive turn at the bottom end of the market.
“But I’m beginning to see green shoot growth. Investors competing for that little place in Middle Park is one example of people getting back into the market and prices growing.
“There’s been a real change in sentiment post-election and I think younger people are certainly running harder on lower interest rates, whereas it doesn’t affect the top end as much,” Mr Morrell said.
“And while the banks have tightened up on lending, the bank of mum and dad has opened up,” he added.
In Sydney, auctioneer Damien Cooley said there were an increased number of bidders registering at auctions across the city, but still a genuine lack of quality properties on the market.
“I don’t think we’ve seen a huge number of new buyers entering the market though. I think it’s the people who have been looking for quite a while who weren’t showing any signs of urgency who will now compete for a property if the right place comes up.
“But it feels like there’s a bit more momentum shifting towards a more positive market, so it’s quite possible we’ve seen the worst of it.”
In Sydney’s north, a two-bedroom Torrens title villa in Lane Cove sold for $1,421,000 – $20,000 over reserve – to a local family.
“There seems to be some renewed confidence in the market,” selling agent Jess Goodman, of Belle Property, said. “There’s not much stock but you should see that pick up after the school holidays.
“It was a rare offering in Lane Cove and very well received. We had five registered bidders and all five put in a bid at one stage.