From boom to bust: How Sydney's auction market tracked over 2019

The outlook for Sydney’s auction market was grim at the start of the year, off the back of tumbling prices, low numbers of property for sale and even lower clearance rates – but it defied even the most bullish expectations.

The year 2019 was a textbook example of going from bust to boom, for Sydney, with the clearance rate climbing more than 40 percentage points over the year.

While it was a slow start, those who could afford to borrow during the downturn were out in force from the first auction day, with 25 parties registering to bid on a quarter-acre block in Castle Hill. 

The property sold for $1.405 million – $425,000 above reserve – to a young family upsizing. A neighbour and local builder remarked that they walked away with a “bargain” with prices likely to rise after a nearby train station opened that month.

It was one of the few properties sold under the hammer that day with a 35 per cent clearance rate from 110 auctions – the lowest level in two years. The number of properties for auction in February was down 38.6 per cent from 2018.

A fortnight later, buyers were still reluctant to open auctions or bid big, fearing overpaying – a Neutral Bay unit taking 10 minutes to secure an opening bid, despite six registered parties. The three-bedroom unit eventually sold for $1.6 million to a Singaporean expat who admitted they overpaid for the property.

That Saturday, the market recorded a clearance rate of 53.4 per cent for 437 scheduled properties, Domain data shows.

Despite the market lingering in the doldrums, market interest was clearly back by mid-April, with more than 150 people and 21 buyers turning out to watch a couple snap up a Newtown terrace for a cool $3.15 million in an “impulse buy”.

Not all vendors were lucky enough to get a standout result, with many forced to slash reserves ahead of the federal election in May. Securing bids was compared to “drawing blood” by some, as crowds endured marathon auctions.

On state election day, in Sydney’s lower north shore, a measly seven bids were placed in a 40-minute auction on a five-bedroom house in Lane Cove.

By May, auction volumes were down 35 per cent year on year, as uncertainty about the federal election, and potential changes to negative gearing loomed. Of 181 properties scheduled for auction on Election Day, little more than half sold.

Within a month, the mood had shifted. The weekly clearance rate hit 65.3 per cent on June 15, the highest revised rate since late 2017, with agents citing renewed buyer confidence off the back of a Coalition victory and June interest rate cut –  the first cut in almost three years.

At one auction that day, more than a dozen bidders turned out to compete for a three-bedroom Lavender Bay house that sold to downsizers for $6.71 million – $1.2 million above the reserve.

Meanwhile, at the relatively more affordable end of the market, a whopping 32 bidders turned out for a three-bedroom West Ryde house that sold for $1.335 million.

One month on – another rate cut and an easing of lending restrictions later – clearance rates continued to gain momentum, but auction volumes remained low.

In July a north shore house, on the market for the second time in nine months, avoided selling at a loss. However, to close the deal they had to lower their expectations by $50,000 in post-auction negotiations – after the Lane Cove West property passed in.

Increasing buyer demand off the back of cheaper credit, combined with a shortage of stock over the winter months, soon had agents reporting an increase in the number of bidders at auction.

Fourteen registered bidders, mostly investors, pushed the price of a Surry Hills terrace $700,000 above reserve to a $3.3 million price tag, on one of the quietest auction days of the year.  

The following week, 13 bidders – undeterred by a neighbouring development abandoned due to contamination – pushed the price of an Erksineville apartment $200,000 above the reserve.

The weekly clearance rate hit 70 per cent in July and has remained above that most weeks since, despite a steady increase in auctions.

In October, weeks after a third interest rate cut, a Mascot townhouse that passed in at auction in 2018 when no buyers turned up, sold to local investors for $176,000 above reserve after attracting six bidders.

The following month, Sydney had it’s busiest auction day since early 2018, with 888 scheduled auctions on the last day of the spring selling season.  The day drew big results with one Castle Cove house selling $1 million above reserve, despite only two bidders, and multiple more properties selling more than half a million dollars above buyer’s expectations.

Those who bought during the downturn have also started to see gains. In recent weeks a couple who “saw an opportunity in the market” made a $400,000 windfall on a Stanmore house – which records show they bought for $1.25 million, just days before the federal election.