After the recent drop in prices, are these quick sales a sign that the Sydney property market is picking up again? Does this trend follow suit across different house categories?
We have analysed the latest property market predictions to explain what lies ahead for those looking to buy or sell a home in NSW.
What Do These Quick Sales Mean for Sydney Property Owners?
Whilst these houses were sold in less than a month, they do not reflect an overall market trend. Rather, these more premium homes are an exception to the rule, having been less impacted by the recent crunch.
Unfortunately, the reality is not as pretty for homes that fall in other categories (such as those in more affordard price range, below $1,000,000). Despite this, there are a number of lessons to learn from these quick sellers that also apply to other NSW properties.
A larger number of 'stale' listings means there is increased competition. This puts downward pressure on prices.
Most houses (currently) spend 42 days on the market in New South Wales, though this varies widely from suburb to suburb. As this figure grows, prices are expected to drop further, since buyers can play off different sellers against each other — especially those that are under pressure to sell.
Why is This Happening?
An increased supply in housing stock (in particularly units) and a drop in foreign buyers interested in Australian property began pressuring prices in late 2017.
Tightening credit in the wake of the Banking royal commission and pressure from regulators has negatively impacted the property market. The shift to reduce the amount of interest-only loans has further reduced the pool of competing buyers while supply of properties has increased driven by financially struggling sellers.
More properties on the market and a smaller pool of domestic and foreign buyers drives down prices, and creates a slower moving market.
Commonwealth Bank projects house prices in capital cities such as Sydney and Melbourne will continue dropping for the next 18 months. Meanwhile, an expert at ANZ Bank reported that the decline of Australia’s housing market will accelerate faster than expected.
Why Should You Care?
Seller's price expectations are often slower to adjust than the market. These expectations tend to be inflated by speculation from the media and agents. However, setting a high initial price can stifle initial interest and momentum. At Sellable, we’ve come across properties listed for over 300 days whose prices have continuously dropped — and still not resulted in a sale.
Once early momentum is lost it becomes hard reigniting interest in a property — even with a lower listing price.
Additionally, getting a loan application approved is becoming more challenging and can take longer as even pre-approved loans are being rejected. This increases the risk of buyers dropping out late in the sales process. In a worst case scenario, settlement keeps getting postponed before the buyer finally drops out of the process while all this time, the property has been off the market.
Read more: Top tips on how to sell your house fast.
Learning from history, it is likely that the property market in Sydney will continue to fluctuate over the next few years. Despite this, a successful property sale is not impossible. Realistic price expectations (and guide) are most important to gain momentum for the start. Potential buyers will feel more inclined to make an offer if they see interest in the property is high.