This spring, everything is coming up roses for those planning to sell their homes. A shortage of property on the market plus strong buyer demand – fuelled by record low interest rates and population growth – continue to drive up prices in most areas.
A large five-bedroom, two-bathroom house in Lilyfield could be in huge demand.
“It’s just a great market for sellers,” says Mathew Tiller, head of research at LJ Hooker. “Listing figures are down from last year and we’ll see a little bit more price growth than was expected because of the uneven supply and demand.
“We will see some more people put their houses on the market for spring but compared with the last few years, that number will definitely be down as some of those considering upsizing or downsizing don’t see anywhere to move into.”
A measure of the strength of current demand lies in the last two weekends’ record clearance rates of 84.1 and 82.8 per cent respectively. The contrasting lack of supply can be seen in the numbers of listings, down in all parts of Sydney in the first seven months of this year compared with the same period last year, and slumping by up to a 24.4 per cent on the Northern Beaches.
“There are significantly fewer properties on the market this year and the Sydney market will struggle to get those 1000-auction weekends we had last year,” says Domain Group chief economist Dr Andrew Wilson. “It’s good for sellers but it does lead to the conundrum: if you sell, where will you buy?
“I think last year a lot of sellers brought forward their property plans so we had extraordinary numbers of sales levels. But the key question, with more competition for properties, is what the impact on prices will be.”
One dampener on price growth will be the traditional rise in the numbers of houses for sale as spring gets underway, says BIS Shrapnel property analyst Angie Zigomanis. While that won’t be as big a quantity as in the last few years, it could still be substantial.
“We’ll see that pressure on prices ease a little as the spring quarter gets underway,” he says. “Also, there’s a lot more new stock being built, both houses and apartments, that will be completed and come online.
“And we’re seeing investor demand still down, with Australian Bureau of Statistics data showing lending activity for investors dropping back, but owner occupiers are coming up to fill the breach.”
Price growth will naturally tail off over time as income levels fail to jump up to match property price rises, believes Housing Industry Association senior economist Shane Garrett. In addition, he believes that many people who were thinking of selling their current home and buying something else are now choosing to stay and renovate instead.
“When they’ve weighed the pros and cons of stamp duty and the cost of selling and buying, and seen how much finance they can raise with the equity they already have in their home, they realise they can do substantial renovations, or a knock down and rebuild,” he says. “And a lot of demand for housing is being displaced into new builds.”
Indeed, the strength of demand for one new apartment complex, The Finery at Waterloo, persuaded developer Mirvac to bring forward the final release. “The level of demand for our projects suggests that spring has come early this year,” says Mirvac’s head of residential John Carfi.
What's happening in my area?
* Percentage change in listings this year v same period last year
** Price growth three months to June 30
|Region||Homes on the market (%)*||Price growth (%)**||Median house price|
|Upper North Shore||-13.3%||0.2%||$1,360,000|
|City and East||-6.1%||12.2%||$2,100,000|
|Lower North Shore||-13.5%||2.3%||$2,205,000|
“There may be a shortage on the market of established, older housing but we’re seeing a lot of demand instead for the new stock available. As well, I think we’re seeing a generational shift in buyer behaviour towards apartments in great locations offering so much more amenity.”
Other developers, such as the award-winning HELM, are also deliberately targeting areas such as Ramsgate and Drummoyne – with an upcoming development Tresor – which tend not to have much supply.
“We tend to stay away from suburbs with more supply and look at those with less,” says general manager Mark Monk. “Together with record low interest rates, we’re seeing a lot of demand.”
Sunshine brings out the best
When retired firefighter John Maguire decided to put his home of the last 50 years on the market, he had no doubts that spring would be the best time to sell.
“Who would buy a house in winter?” he asks. “Spring is a much better time. The sun is out shining on the house, the flowers are in bloom and the garden looks great. A house really looks at its best then.
“And in summer, it’s too hot and people are too busy going to the beach – and I will be too!”