There are more signs that Sydney's property market has turned the corner and could be heading for the next boom, as shown by the robust residential auction data out recently.
According to independent property analysts CPM Research, auction clearance rates have continued to spiral upwards in August reaching 74%, the highest level for four years amidst lower supply. The number of listed properties dropped from over 1,400 to 1,200 during the month and the withdrawal rate was down by 2% from July.
Managing director of CPM Research John Wakefield said homeowners were becoming more confident in selling their real estate assets while buyers were now willing to pay a higher price to secure the home they wanted. "The recent interest rate rise has had no discernible impact on the Sydney auction market and it is likely that the improved market conditions will flow into the peak spring selling period," said Wakefield.
But the difference between a positive and a negative market outlook may depend on your perspective. In late August, the Financial Review reported that Sydney's property prices were bouncing back with a 2.3% increase from the March to June quarter. Then in early September The Australian described the city's housing market as "sluggish", suggesting the APEC conference, the looming federal election and the prospect of more interest rate rises had softened early spring sales.
While the overall median value of properties has been rising, some areas of Sydney have been falling behind due to foreclosures and distressed sales.
Jason Smith, a senior valuer at Herron Todd White, said while the core property areas of Sydney such as the lower north shore, inner west and eastern suburbs were all performing well, people in the outer west were struggling. "There's a lot of mortgagee and possession sales activity in the western areas of Sydney as a result of the interest rate increase. I think these are going to be the areas to be hit hardest," said Smith.
"These are the people in stress - they're spending the largest proportion of their income every month on their mortgages, so any interest rate increase is going to push that part of the market further into mortgagee land."
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