Homeowners cash in on record February auction market, with no signs of a slowdown in sight

An overflow of eager buyers who missed out last year, combined with the highest number of February auctions ever, has stoked Sydney’s already heated property market which is showing no signs of burning out this year.

Despite some expectations of a market slowdown in 2017, Greater Sydney recorded its highest ever clearance rate for the month of February of 81 per cent, notwithstanding a record number of properties under the hammer.

The number of auctions for the first two months of the year were up 30.7 per cent from last year – from 2103 to 2748, according to Domain Group data.

AMP Capital chief economist Shane Oliver said that while he had been looking to a market slowdown in 2017, the volume of properties going to auction and the high clearance rate suggested otherwise.

“To get a slowdown historically we’ve had to have interest rate hikes; yes the banks themselves have risen rates … but it’s not having any dampening impact,” he said.

Mr Oliver noted that apart from record low interest rates, the market strength was due to a combination of a return of investors – thanks to the relaxation of some lending restrictions – continued demand from foreign buyers and a backlog of buyers and sellers entering the market after years of holding off because of concerns of a property bubble. 

“We had lots of talk about a property bubble and cautious buyers held back, but they’ve realised it hasn’t happened yet … bubbles burst straightaway, whereas we’re still seeing prices growing,” he said.

“It kept some people away from the property market, it started to deflate a bit, but we saw no disaster, and it’s heated up again” he added. “With auction clearance rates over 80 per cent, people are thinking ‘maybe we better get in now’.”

Across the city in February, there were four suburbs – Epping, Baulkham Hills, Hornsby and Marrickville – where all houses that went to auction sold. The appetite for property was strongest across the lower north, upper north and inner west regions, which had respective clearance rates of 92.3, 85.3 and 86.5 per cent.

Selling agent Wayne Vaughan of McGrath Epping said lower stock last year had led to pent-up buyer demand.

“We’re seeing more coming on this year, but by no means enough to satisfy that demand,” he said. “There’s a really good energy about the market at the moment, and we’re getting great numbers through open homes.”

Among the homeowners cashing in on buyer demand are Kristen and David Bird, who are selling two properties in Epping.

The couple, who own two neighbouring homes on Epping Avenue, already auctioned their investment property on February 25, and will put their family home to auction in March.

David and Kristen Bird will sell their family home, which is next door to their investment property, on March 25.​ Photo: Daniel Munoz

“We bought a new family home in Manly in November last year,” Mr Bird said. “But we wanted to sell in the beginning of the year and not the end.”

The couple, who have four children, said they were relieved to see their investment property sell under the hammer last Saturday for $1,890,000, and said the strong clearance result in Epping was promising for the coming auction of their home of 25 years.

“March is always one of the busiest months for buyers, you’ve got people coming back from holidays in January, and then you get the push in February and March of people looking for a new home,” the property valuer said.

The overflow of competitive buyers who missed out on properties last year would result in vendors continuing to choose to go to auction over private treaty, said LJ Hooker head of research Matthew Tiller.

 “We haven’t seen demand come off all all since last year, and right now the biggest factor driving price growth is a lack of stock,” he said.

While the clearance rate and auction numbers defied expectations of a slowdown, Domain Group chief economist Andrew Wilson said this had not translated into higher auction price growth.

“Prices are only up 2.5 per cent over the year, to a median of $1.23 million.” he said. “The big question is whether these record clearance rates will now translate into stronger price growth.”

Dr Wilson noted that while auction numbers for Greater Sydney were lower this weekend – with 841 scheduled auctions compared to last Super Saturday’s 940 – there were still 17.1 per cent more properties going under the hammer than the same weekend last year.