Sydney auctions still high despite mid-winter chill

Although auction numbers and clearance rates are predictably declining as the usual mid-winter distractions impact the local market, volumes remain at record levels for this time of the year.

Nearly 650 homes are set to go under the hammer this Saturday which although lower than last weekend’s 748 auctions but well ahead of the 200 auctioned over the same weekend last year which was in pause mode due to Federal Election Day.

14167 weekend auctions have been listed on Sydney since February which is 3401 or 31.6 per cent higher than the 10766 homes auctioned over the same period last year.

The inner west continues clearly as Sydney’s most popular region for auctions this weekend with 120 listed.  Next highest is the city and east with 77 followed by the south 67, the upper north shore 66, the west 57, the lower north 55, the south west 45, the northern beaches 36, Canterbury Bankstown 35, the north west 31 and the central coast with 20 auctions listed for Saturday.

Blacktown is the most popular suburb for auctions this Saturday with 12 followed by Ashfield 11, Mosman 10, Randwick and Surry Hills each with 9, Marrickville and Eastwood each with 8 and Balgowlah with 7 auctions listed.

The Sydney weekend auction market recorded its third sub-70 percent clearance rate last Saturday with the local market now clearly tracking at its lowest since December 2015.

Sydney recorded a clearance rate of 69.5 per cent last Saturday which was almost the same as the 69.6 per cent recorded over the previous weekend but again lower than the 74.1 per cent recorded over the same weekend last year.

Last year’s winter market was influenced by official interest rate cuts in May and August that acted to bolster overall activity. This year’s winter market is however normalising by contrast with typically lower activity before the usual spring revival. This may however be short-lived with the likelihood of increased activity from first home buyers in July set to re-stimulate the market.

Last weekend was another near record offering of homes for auction with June set to smash the record for auctions conducted over that month. Given unprecedented winter supply, clearance rates still close to 70 per cent reflect underlying robust demand for property in Sydney.

Typical seasonal impacts have clearly emerged in the regional markets with recent boom-time results recorded by inner-suburban, higher-priced suburban areas certainly now a thing of the past.

Significant changes to the stamp duty payable by NSW first home buyers will come into effect this Saturday. First home buyers will be exempt from paying stamp duty for purchases of both new and established homes with a sale price of up to $650,000.

First home buyer activity in NSW has been significantly subdued over the past year as steep price rises particularly in Sydney has sidelined many despite record low interest rates.

Latest ASBS data reveals that just 1169 first home buyer loans were approved in NSW over April with lending down by 10 per cent over the first 4 months of this year compared to the same period last year. First home buyer activity accounted for just 4.3 per cent of all residential lending approved over the month which is the clearly lowest market share of all the states and well below the long-term average of 11.7 per cent.

Stamp duty relief for first home buyers will likely result in higher levels of activity from this group keen to take advantage before prices inevitably rise from this boost to demand.

Dr Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson join on LinkedIn and Facebook at MyHousingMarket.