Our Market - May 2023
May has certainly provided us with a fresh blast of weather, it feels like it will be a successful snow season in the Southern Alps!
Now whilst the weather has been cold there has been nothing cold about the local real estate market. Buyer demand continues to outstrip supply and although this month saw interest rates increase for the 12th time since May 2022, buyers remain eager to purchase, showcasing their assertive bidding behaviour and driving property prices upwards.
Please see the statistics below on how the market performed in May 2023 in our local real estate market (in brackets is the same month last year).
Sold at Auction = 37 (39)
Pre-Auction Sales = 28 (13)
Passed in at Auction = 9 (7)
Withdrawn from Auction = 2 (30)
Auction Clearance Rate = 86% (58%)
Sold by Private Treaty = 50 (22)
The comparison of this year’s auction clearance rates to the previous year’s reveals a striking contract and showcases the robustness of the local market. Despite the challenges posed by a high cost of living, rising interest rates, and an uncertain economy, one factor reigns supreme: the compelling battle between supply and demand. The scarcity of available properties has created an extraordinary situation, as evidenced by the dwindling auction volumes over the past few years.
Auction volume comparison. Source Core Logic
• Saturday 13th May 2023: 649 auctions across Sydney
• Saturday 14th May 2022: 934 auctions across Sydney
• Saturday 15th May 2021: 1149 auctions across Sydney
These staggering statistics reveal that current auction volumes are down 30% from the same time last year and an incredible 43% from the same period in 2021. The reasons behind this scarcity are multifaceted. Firstly, many potential sellers perceive the negative economic climate as an unfavourable time to sell, leading to hesitation to list their properties. Secondly, limited stock availability leaves sellers in a quandary, as they struggle to find suitable properties to buy themselves. Lastly, the traditional slowdown in the real estate market during winter also contributes to the reduced number of listings.
However, low stock levels cannot persist indefinitely, and we anticipate an increase in available properties come spring. Several factors contribute to this expectation. Firstly, the looming “mortgage cliff” and the transition from fixed to variable rates in the upcoming months are expected to motivate many homeowners to sell, as their interest payments will vastly increase overnight. Additionally, as tradition dictates, the arrival of spring typically attracts more sellers to the market. As more properties become available, potential buyers who have been patiently waiting for suitable options will secure their desired properties, with many of these having properties to then sell, which will trigger a chain reaction of new listings. In addition, as supply and demand find equilibrium, property prices are likely to stabilise. Whilst many sellers are holding off for now, it is worth noting that some are capitalising on these strong market conditions and securing a premium price now, so they can make their move in spring when more stock comes on the market.
Another big discussion point is housing affordability. St George Bank has just released an interesting paper on building approvals titled “Housing balance set to get worse” which is an interesting read on their outlook on this issue. Click on the link to read St George Data Snapshot.
Disclaimer: Please note all information contained in this report is merely our opinion, it should not be relied on or considered advice