Our Market - June 2023
As we approach the midway point of 2023, it is evident that the Sydney real estate market has displayed surprising resilience and strength, defying expectations set by the previous year's performance. Despite ongoing challenges such as increasing interest rates, persistent inflation, and rising living costs, the market has shown remarkable stability and growth. Please see statistics on how the market performed in June 2023 (in brackets is the same month last year):
- Sold at Auction: 37 (33)
- Pre-Auction Sales: 29 (31)
- Passed in at Auction: 15 (21)
- Withdrawn from Auction: 3 (16)
- Auction Clearance Rate: 70% (63%)
- Sold by Private Treaty: 32 (15)
The market witnessed a swift improvement in the first quarter of the year, and this positive momentum continued into the second quarter. This is reflected in the consistently strong auction clearance rates. We closely monitor 12 suburbs, including Newtown and its surrounding areas, and the monthly auction clearance rates for these suburbs in 2023 are as follows:
- February: 70%
- March: 83%
- April: 84%
- May: 86%
- June: 70%
These auction clearance rates are truly extraordinary when compared to the previous year, during which auction clearance rates consistently hovered around 40-50% once interest rates started increasing in May 2022. Despite further interest rate hikes this year, the market has made a complete turnaround. The primary factor contributing to this remarkable shift is the severe shortage of available properties. Auction volumes have been down approximately 30% compared to the same period last year, creating a significant demand-supply imbalance that has resulted in robust market conditions. However, it is worth noting that June's auction clearance rate dropped well below the 80% plus clearance rates witnessed in the preceding three months. This may be a sign of a shift in market conditions and buyer sentiment.
Various market segments have shown exceptional performance, with a few notable highlights. The first homebuyer market has experienced considerable strength, aided by government initiatives such as stamp duty concessions. These incentives, including the option to pay an annual tax instead of a lump sum stamp duty, have contributed to increased activity among first-time buyers. Additionally, the upsizing market has flourished, as buyers have sought larger properties to accommodate their changing needs. Nevertheless, this market segment faces a scarcity of available properties, intensifying demand and driving prices upwards. One of the primary reasons for this scarcity is that sellers in this segment often prefer to buy a new property first, leading to limited inventory as they are unable to secure a new home before selling their existing one.
Given the prevailing economic uncertainties, including rising interest rates, high inflation, and the overall cost of living, making accurate predictions about the future of the market becomes increasingly challenging. However, we anticipate that supply will remain low during the winter season. As we transition into the warmer months and the "mortgage cliff" phenomenon begins to take effect, we expect to witness an increase in property listings. It is also worth considering that the Reserve Bank of Australia has indicated the possibility of further interest rate increases. Consequently, while prices are likely to remain robust during winter, we anticipate a slight cooling of the current market heat as spring approaches. This will provide buyers with a broader range of choices and opportunities, while also motivating some sellers to be more active in the market.
If you are contemplating your next move in the current market, please do not hesitate to reach out. I am here to offer further insights, assistance, and guidance to help you navigate these dynamic market conditions successfully.
If you would like to discuss your next move in the current market, please don’t hesitate to reach out as we would be only too happy to help.