Steady but soft Sydney market set to fade in December

Sydney auction numbers will be well down this weekend after last Saturday’s flood of late spring listings.

The Sydney market will host more than 850 auctions on Saturday compared with last weekend’s 1065, and also significantly below the 1028 listed at the same weekend last year. 

Last weekend’s offerings were the highest recorded for a November Saturday in Sydney and just below the all-time spring record of 1088 set a month ago on October 31 and the fourth-highest on record.

The south will host the highest number of auctions in Sydney this weekend with 124, followed by the inner west with 121. The upper north shore will host 110, the city and east 80, the south-west 75, the northern beaches 72, the lower north 71, the west 67, Canterbury-Bankstown 63, the north-west 51 and the central coast 31. No auctions are listed for the Blue Mountains this weekend.

Mosman is again the most popular suburb in Sydney for auctions this weekend with 14, followed by Chatswood and Ashfield, each with 11; Baulkham Hills and Manly, each with 10; and Blacktown, Maroubra, Lane Cove and Wahroonga, which each has nine auctions scheduled on Saturday.

The under-siege Sydney home auction market held the line last weekend despite the auction flood.

Sydney reported an auction clearance rate of 58.6 per cent last Saturday, just above the previous weekend’s 57.5 per cent result but well below the 74.6 per cent recorded at the same weekend last year.

Despite the steady result, Sydney has recorded consecutive weekend clearance rates below 60 per cent for the first time since November 2012 and the local market is clearly looking for a breather over Christmas.

Sydney weekend auction rates have averaged 63.4 per cent in spring this year compared with 79.6 per cent in the same period last year. They are the lowest since the 63.3 per cent average weekend rate recorded in spring 2012.

Despite the lowest spring clearance rates in three years, Sydney has recorded an all-time record spring for the number of auction sales, reflecting the unprecedented volume of homes going under the hammer in the past three months. 

Sydney continues to record a remarkable divergence in results between regions as higher priced locations closer to the city still report reasonable spring results. However, buyer activity in outer suburban areas to the west of the city remains lower.  

Trend weekend auction prices in Sydney increased last weekend, from the previous weekend’s $1,161,500 to $1,173,000. They remain 19.9 per cent higher than the $977,938 trend recorded at the same weekend last year.    

The city and east recorded the highest median auction prices for houses at $1,875,000, followed by the upper north shore ($1.56 million), the lower north ($1.54 million), the inner west ($1,522,554), the northern beaches ($1,479,000), the north-west ($1,377,500), the south ($1.23 million), the west ($985,000), Canterbury-Bankstown ($935,000), the central coast ($870,000) and the south-west ($850,000).

The Sydney home auction market has finished spring on the slide with clearance rates at the lowest levels in three years. Record numbers of homes have nonetheless been sold under the hammer over the past three months. However, the sales peak was earlier in the spring.

Market confidence remains fragile and particularly low in Sydney’s middle and outer western suburbs. Fewer than 2000 homes will be auctioned in December and although still a challenging number for the local market, will nonetheless be well below the auctions in December last year. 

Low and falling interest rates energised the market last autumn. However, higher mortgage rates over spring have contributed to sharply falling activity.

This week, the Reserve Bank met for the final time this year and, reflecting better recent economic data, official rates were left at the current record low 2 per cent. Rates will be on hold for eight consecutive months until the bank meets in February 2016.

However, as has happened in recent months, mortgage rates can move independently of Reserve Bank settings. And this week, there have been reports of deposit rates being cut to below 2 per cent.

Dr Andrew Wilson is Domain Group’s senior economist.

@DocAndrewWilson

The Property Show expert 2UE Saturdays 12.30pm to 1pm.