THE SYDNEY PROPERTY MARKET -
WHAT'S HAPPENING NOW

Peter Kelaher

The Sydney Market - What’s Happening Now The Sydney property market has shown huge resilience to the Global Financial Crisis, and has had somewhat of a quick recovery due to the RBA cash rate being 3.25% one of the lowest rates in many years, vacancy rental rates at 1.5%, and stock levels 30% less than this time last year. The two main drivers for the resurgence in the Sydney property market has been the lack of stock and low interest rates. Now a third factor which is the main factor that will drive house prices upwards from here will be the general business recovery which enables people to feel secure in there job therefore confident in making a property purchase. The property market has made a huge U turn from 2008 with auction clearance rates in 2009 hovering around 70% to 80%. Previously they were around 50% and under. Here’s a quick snap shot of what’s happening around Sydney at present. -Units and houses up to $650,000 are hot, selling in a week. -Houses up to $4million on Lower North Shore, Eastern Suburbs, and Mid North Shore, very strong absolutely no stock, worst stock levels in ten years. This market has stabilized now and will start to creep up because of supply and demand issues. - Houses over $4 million are still fairly soft in all the blue ribbon areas and stock levels are still low but so are buyers, where in the other price brackets mentioned there seems to be a build up of buyers occurring due to low levels of stock for some time now. There are few reasons why stock is low, and one of the reasons is that investors and home owners at 9% interest rates were getting forced to sell their properties, but now the rates have halved people can afford to hold their properties. Investors in particular are seeing capital gains for the first time in many years, and are still getting rent increases even though they are smaller than before. With the stock market too uncertain and money in the bank only offering a 3% to 4% return there is no doubt that the property market is now entering into its next upward cycle. Another reason stock is tight is because owner occupiers are choosing to sit on their hands in fear of losing their jobs and uncertainty in general, so the best thing to do is nothing. At present we are now entering into what I call a locked market which is a vicious cycle where no one sells because they are too scared they won’t find anything to buy and have to rent. And if they decide to rent they are worried in this upward trending market that they will get caught out if they want to purchase because they are locked into a lease. Please also note rising unemployment doesn’t necessarily dampen a property market. In the property boom of 2001 to 2003 the unemployment rate averaged around 6.74% to as high as 7% and the cash rate was fluctuating from 6.75% to 8.25%. Unemployment today is presently at 5.7% and the cash rate is at 3.25%. If you want to take advantage of the capital gain that will occur in the property market over the next 3years the time to act is now.

For a full list of other articles by Peter Kelaher, Managing Director of PK Property Search & Negotiators Pty Ltd please click here Home Buyers advice

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