Open homes for Sydney auctions seeing much higher attendance, agents say

Sydney’s more affluent and desirable regions flashed signs of a return to steady growth in real estate prices at the weekend despite a sluggish start to the year’s auction market.

On Saturday, the Domain Group reported an auction clearance rate of 57.5 per cent from a small sample of 112 reported auctions. The weekend auction list was skewed to the city’s outer western suburbs, rural locations and seaside towns, with on-trend areas such as Sydney’s lower north shore, the northern beaches, the inner-west and the eastern suburbs under-represented in the figures.

Real estate agents in these higher-priced pockets of the city are tracking an upsurge in foot traffic at open-for-inspections. They say there is pent-up demand from buyers who sold an existing home last year and are under time pressure to find a replacement property, as well as from new prospective buyers who took the decision to start house-hunting over Christmas.

North Shore-based Cunninghams Real Estate held 38 open houses on Saturday.

“We averaged about 15 groups through each property, which was excessively high for this time of year,” said the firm’s managing director John Cunningham.

“We see the year taking off quite strongly – there is a good balance between buyer demand and supply. At our first opens three weeks ago, the numbers were big straight away.”

It’s traditional in the early new year market to see left-over buyers from the previous year and a demand spike fuelled by real estate transactions all but shutting down over January. But there appears to be a bounce back to more stable transaction conditions after 2017’s roller-coaster market.

The 2016 market saw Sydney house prices ratchet up substantially, largely on the back of two 0.25 per cent cuts to official interest rates in that year. Early to mid-2017 was another period of growth, but at a moderate level compared with previous years.

But the end of 2017 saw market conditions ease across some locations.

In a market outlook report released last week, the national valuers group Herron Todd White cautioned that different parts of the Sydney market could perform very differently this year.

“Sydney represents a diverse market with various price points and sub markets with property types performing quite differently depending on a range of factors,” HTW said.

“While auction rates and activity levels have appeared to slow recently, we have still seen healthy growth overall with houses up 2.1 per cent and units up 5.4 per cent over the full year, according to CoreLogic. We expect that 2018 will be a year of steady growth, particularly for properties in highly desirable regions with limited supply and high-quality products.”

One of the big market trends over the past 18 months has been the increased use of auctions to sell properties in outer-suburban areas that were previously private-treaty sales markets. The auction clearance rates in the outer suburbs, especially in the city’s west, have consistently underperformed the sales disposal rates seen in areas such as the inner-west and the eastern suburbs.

Market watchers also expect the large number of off-market transactions to continue, particularly in the prestige sector.

There was a mixed bag of results in the city on Saturday. Some prospective buyers held their fire at auctions in the hope of pushing down a property’s asking price in the post-auction negotiations, while buyers in general are pickier and less prepared to compromise compared with the situation during the market’s 2012-to-early-2017 bull run.

The top house sale reported on the weekend was for a contemporary beach house at 39 Albert Street, Freshwater. Positioned 450 metres from Freshwater Beach, it made $3.35 million through LJ Hooker Balgowlah, while a house at 4 Cyrus Avenue, Wahroonga, fetched $1.92 million through McGrath Wahroonga.

Allen & Sheppard’s James Sheppard said he was seeing large numbers of people attending open houses but many of them were not yet ready to buy. Many still had to arrange finance or sell an existing home, he said.

Allen & Sheppard signed on three registered bidders at Saturday’s auction of three-bedroom/one-bathroom brick home at 2 Dawson Street, Thornleigh, about 800 metres from Thornleigh station.

Only one party bid, though.

“We had a good auctioneer who was able to get the bidder to go up from $1.15 million to $1.18 million, and then there was a vendor bid of $1.2 million,” Mr Sheppard said. “It ultimately sold for $1.21 million.”

Across town, there was no immediate pay-dirt for the vendors of a six-bedroom house with a pool at 28 Connelly Way, Kellyville. It was passed in on Saturday for $2.03 million after bidding kicked off at $1.65 million.

The Ray White Castle Hill-listed property will now be offered for private sale, despite attracting a big crowd of onlookers and seven registered bidders to its auction.

Century 21 Fairfield director Nickolas Dilles passed in a small two-bedroom house on a large block at 47 Orchardleigh Street, Yennora, for $765,000.

“It was a nice big block of land but it was opposite the factories and it had sewer lines going down the side driveway and diagonally across the block,” he said.

“To build there you’ve got to encase the sewer and it’s an extra cost. The interested people around there want to put a granny flat on the block – that’s the problem.

Three genuine bidders went after the property. Bidding starting at $650,000, but no-one was prepared to go near the $820,000 reserve.

Mr Dilles said: “If I didn’t have the sewer problem I would have had at least six or seven bidders, but at this time last year I would have had 15 to 20.”

HTW sees the eastern suburbs market remaining fairly stable throughout 2018 with stronger price growth for higher quality properties and more sought-after positions. It notes that the inner west and city auction clearance rates saw a moderate decline between the middle and the end of 2017 with many vendors choosing to withdraw their properties from the market prior to auction with the hope that the market would improve again at the beginning of 2018.

“This was partly due to vendor expectations which seemed to remain stubbornly high as well as a tip in the supply versus demand balance in parts of the region. We expect 2018 to continue this trend with some price points affected more than others.”

The valuer group says buyers in the southern suburbs will see overall stable conditions this year but they could snap up a few good buys: “Properties in blue chip areas will most likely remain stable while properties in secondary positions (main roads or near industrial areas) will notice the slower market conditions.”

Mr Cunningham, who has just stepped down as president of the Real Estate Institute of NSW, said many home owners had sold last year and then held off from purchasing again until they were sure the market had bottomed.

“The market probably bottomed in November-December in terms of its adjustment from the peak of the market,” he said.

• Related: Click here for Saturday’s auction results
• Related: Click here for the Market Snapshot