Sydney market falling as record spring Super Saturday arrives

Sydney’s home auction market continues to weaken, with increasingly nervous sellers now confronted with a record spring Super Saturday.      

More than 1100 homes are likely to go under the hammer this weekend. which will be the highest total ever conducted on a spring day in Sydney and probably just below the record 1128 set on the pre-Easter weekend March 28 this year.

This weekend’s auction activity will be well ahead of the 796 listed last weekend and higher than the 883 conducted over the same weekend last year.

Sydney’s inner west suburban region will host the most number of auctions this weekend with 168, followed by the upper north shore 162, the south 137, the city and east 130, the northern beaches 91, the lower north 90, Canterbury Bankstown 72, the west 71, the south-west 69, the north-west 52, the central coast 31 and the Blue Mountains with just one auction scheduled this weekend.

The most popular suburbs for auctions in Sydney on Saturday are Mosman, Ryde and Killara each with 13 followed by Epping and Manly, each with 12, and St Ives and Paddington with 11 auctions listed at the weekend.

The Sydney home auction market continues to crumble with skittish buyers increasingly sidelined by rises in interest rates.

Sydney again reported its lowest clearance rate of the year last Saturday, with the local market now also tracking at its lowest levels since the spring of 2012. The 64.4 per cent weekend result was below the 65.1 per cent recorded the previous weekend and significantly below the 78.9 per cent reported over the same weekend last year. 

The Sydney market is now on course to record clearance rates below 60 per cent this spring, which would be a remarkable outcome considering the rate tracked at near 90 per cent over May – just five months ago.

The predicable announcements by the other major banks at the end of last week to follow Westpac and raise mortgage rates for owner-occupiers has fuelled market nervousness, with falling confidence now emerging as a driving force in the Sydney market.

The unprecedented shakeout in the Sydney housing market over recent months follows the implementation of various so-called macroprudential policies by financial regulators. These polices have resulted in higher interest rates for investors and now for owner-occupiers.

Although clearance rates fell again at the weekend, trend auction prices continue to increase rising to $1,136,750 compared to $1,115,625 the previous weekend and remained 19.3 per cent higher than the $952,625 trend recorded over the same weekend last year.

Higher interest rates as a consequence of action by financial regulators have clearly contributed to the decline in the local market over recent months. Lower levels of activity from the property market can have only negative impacts on the economy. Reduced spending capacity by consumers and declining confidence heading into the pre-Christmas trading period also will not be welcomed by retailers.

The national economy continues to underperform with disappointing ABS job market data for September and lower than expected inflation data reflecting a largely stagnant economy. The global economy is also showing increasing signs of decline with growing concerns particularly over the performance of China.

The Reserve Bank will ber likely to take this into account when it next week determines the direction of official interest rates over November. The rapid decline in Sydney and Melbourne house price growth levels over the September quarter, as revealed by Domain last week, is also a factor the bank is likely to consider.

Dr Andrew Wilson is Domain Group’s senior economist Twitter @DocAndrewWilson

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