Recent Home Living Property Culture The Team
Recent Home Living Property Culture The Team
Property

THE SYDNEY MARKET - 2017 QTR 1

03-May-2017
Written by Property Analytics

Photo by Des Harris


Over the last year or so, an unusual trend has developed across the Sydney real estate market – while the median $ house price continues to increase in most areas, the number of houses being sold has been decreasing significantly.

This is a pretty rare occurrence. Looking at trends over the last 10, 20, and 30 years, house prices tend to move up or down in the same way as house sale volumes – when house prices increase, sales volumes tend to increase as well. And, conversely, house sales volumes typically decrease when prices flatten or decrease. Simply put, more vendors choose to sell in a market where prices are going up rather than down.

This positive correlation is evident in the Upper North Shore housing market. The median $ house price generally moves in the same direction as the houses sold.

But recently, the number of houses sold has been decreasing steadily while the median $ house price has ticked up. Where about 18% fewer houses sold in 2016 compared to 2015, prices increased by about 5%. This is pretty unusual.

So how can this be explained? Most selling agents and market experts will tell you that demand for Houses remains strong among home buyers, investors and foreign purchases alike, but there’s just not enough stock to meet the need. With fewer properties available, competition between buyers for those properties becomes more intense, and prices naturally go up.

And, why are sales volumes so unusually low? There are a few reasonable explanations, ranging from global economic uncertainty, to domestic political fragility, and subdued consumer and business confidence. At a practical level, many potential vendors are reluctant to sell at a time when their purchase options are so limited (i.e. people don’t like to sell unless they have a property to move in to). This scenario resonates most strongly with people looking to down-size into something other than an apartment. Unfortunately, it becomes a self-fulfilling market dynamic.

The good news is that lower sales volumes aren’t cause for concern. In fact, across most areas, sales volumes in recent months are close to historical average (i.e. the number of sales in November 2016 aren’t drastically lower than the average from November 2007-2015). It’s the trend that is interesting, and the implications on vendors and buyers in today’s market.

The obvious conclusions… It’s a good time to sell when so few competing properties are on the market. And, if you find a property that meets most of your needs, then snap it up, because options may continue to be limited.

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