The February 2011 Sydney property market – “…in no rush to buy”

Despite the re – opening of the Sydney property market this year coinciding with tragic and de-stabilizing natural disasters in Queensland, Victoria and more recently, in New Zealand, some trends are already emerging:

An unprecedented volume of properties being advertised for sale.

Relative to 25 February 2010, RP Data recorded a 23% increase in new advertised listings and a 17% increase in total advertised listings which included a substantial number of re-listed properties that failed to sell last year. Time will tell if this trend is driven by the 2010 interest rate rises (kept on hold by the Reserve Bank of Australia this month) or a release of supply pent up since the 2008 global financial crisis. Either way, the implications of this trend for Sydney house prices and the Sydney housing market 2011 is good news for buyers.

Stable between $1 million and $2 million

Contrary to remarks of this type on today’s news.com.au and which have proliferated in the mainstream press over the past month “HOMEBUYERS are deserting the property market in the wake of recent natural disasters with latest figures showing the biggest monthly slide on record”, between $1 million and $2 million, the increase in supply of Sydney residential property has been matched by increased demand with investor and owner occupier activity in this bracket remaining strong as predicted in CurtiseCall December 2010. As an example and in a trend consistent with inquiries received this year by Curtis Associates, of the auction results reported in the Home Price Guide for 26 February 2011, at least 77 of 109 properties over $1 million found buyers – equivalent to a healthy but not overheated 71% clearance rate.

A buyers’ market below $1 million

This and the bracket above $2 million are those responsible for some relatively anaemic overall auction clearance rates reported for Sydney this month. The main reason for that trend which is in stark contrast to the trend noted this time last year (CurtiseCall February 2010), is the unwinding of government stimulus packages for first home buyers without those buyers having been replaced by investors.

A buyers’ market above $ 2 million

Consistent with the trend also predicted in CurtiseCall December 2010, of the 77 sales over $1 million discussed above, around only nine sales or 12% of the 77 were over $2 million. That trend was spread through out the Sydney housing market and included:

• 17 Railway Parade, Eastwood – $2.15 million (a new suburb record)
• 3/120 North Steyne, Manly – $3 million
• 14 Duncan Street, Maroubra – $2.02 million and,
• 18 Telopea Street, East Redfern – $ 2.05 million.

“No rush to buy”

This is the expression which best describes the most pervasive of the “animal spirits” currently influencing the 2011 Sydney property market at all levels but to a lesser extent in the $1 million to $ 2 million bracket.

Part of the general buyer reticence is undoubtedly a function of the phenomenon which the Governor of the Reserve Bank of Australia described in these terms on 11 February 2011:

…” the relatively cautious attitude of households towards their finances. This has been much remarked on over the recent period, but in fact looking back it seems that the rate of saving from current income has been rising for several years now. With the caveat that saving is not very accurately measured, it looks like the propensity to save out of new income has been quite high, and that people are working to reduce debt more quickly, and are more demanding of value in their purchases than they had been for some time.”

Another part is the increase in supply of stock discussed above which is encouraging the perception amongst buyers that if an across the board buyers’ market has not already arrived, it is just around the corner.