The autumn 2010 Sydney property market – a cold wind is blowing

May 21st, 2010
Autumn leaves blowing on a Windy Cold Day. Paseo del Prado small park in between the roadway, showing Autumn Leaves on a cold, wet day. Madrid, Spain. People in the background, unrecognizable, crossing the sidewalk while leaves blow in a blustery windy manner.

Autumn leaves blowing on a Windy Cold Day. Paseo del Prado small park in between the roadway, showing Autumn Leaves on a cold, wet day. Madrid, Spain. People in the background, unrecognizable, crossing the sidewalk while leaves blow in a blustery windy manner.

While prices in the 2010 Sydney residential property market have been defying gravity for months, there blows a cold autumn wind strongly suggesting this is about to change. CurtiseCall’s Sydney property market forecast for 2010 is that although the often quoted imbalance between supply and demand in Sydney’s property market is likely to prevent prices from crashing to the floor, the window has opened on opportunities for buyers who have been waiting for the vendors’ dream run to end.

The pre Easter frenzy screeched to a halt in the past three weeks as the market finally succumbed to:

  • six increases in the official cash rate since October 2009
  • the average home loan variable interest rate having now hit the traditional pain threshold of around 7.5%
  • the exodus of first home buyers
  • stock market gyrations and
  • the spectre of a second GFC flowing from the sovereign debt crisis in Greece.

The falling auction clearance rates and successive drops in fresh owner occupier loan applications reported in the popular press understate what is occurring in the Sydney property market. For those at the coalface all over Sydney on a daily basis such as Sydney buyers’ agents, Curtis Associates, the trends are much clearer. The past month has seen:

A spike in the number of properties selling prior to auction

Reflecting vendor nervousness, it is now common for half or more properties in an order of sale to sell prior to auction.

A significant increase in the number of properties available off market

Several of these opportunities are motivated by financial or other stresses.

Savvy vendors cashing up

Take for example the quaint and usually tightly held Watkins Street, Bondi where the $1.406 million sale of 36 Watkins Street, Bondi at auction on 29 April 2010 triggered a domino effect with 8 and 24 Watkins Street, Bondi each selling within the next fortnight for $1.08 million and $1.13 million respectively.

Horror stories for some vendors at auction through no fault of the selling agents

Consider the auction on 4 May 2010 of 17 Rush Street, Woollahra, 702/72 – 78 Bayswater Road, Rushcutters Bay , 77 and 79 Windsor Street, Paddington, 21 Hampson Street, Maroubra and 6 Ocean Street, Woollahra. None of those properties sold at auction and of the four bids made that night, one was a vendor’s bid and two were questionable. Those vendors fared better than the owner of 11 Bellevue Street, Surry Hills whose auction last Saturday failed even to attract an onlooker.

On line advertisements being revised or re-run

This is especially evident in Sydney’s penthouse market and parts of the ultra top end such as 10 Bay Street, Mosman.

Downward trends in Paddington which is regarded as a bellwether by those predicting trends in the Sydney housing market 2010 including:

Reduced turnover

As this edition of CurtiseCall goes live, reported turnover for May 2010 in that suburb should be around one half of the previous month. This is particularly so at the top end with the sales of 10 – 14 Church Street, Paddington for $2.4 million and 30 – 34 Stephen Street, Paddington for $3.7 million being the notable reported exceptions in the past month.

Properties being withdrawn from sale as vendors try to buck the trend

Properties in this category include 77 Windsor Street, Paddington mentioned above which, despite a long and expensive campaign marketing it in conjunction with 79 Windsor Street, Paddington as a DA approved renovation opportunity, was removed from the market earlier this week.

Properties languishing for months without selling

A prime example is 16 Caledonia Street, Paddington which has been advertised for sale almost consistently since June 2009 and remains on the market with a $4 million asking price.

Mortgagee sales

Usually unheard of in this blue ribbon suburb, recent examples include 13 Ormond Street, Paddington and the residential development site at 261 – 263 Oxford Street, Paddington. Those properties join 16 Birrell Street in neighbouring Bondi Junction in this category.

If these trends continue and spread throughout the Sydney property market, CurtiseCall predicts that prices will inevitably stabilise if not fall.