Restrictions to public auctions saw a sizeable portion of vendors either pull the plug in the wake of April or resort to a private sale, resulting in a clearance rate of 46.9% as per CoreLogic data. The softening of social-restrictions, however, has more recently lifted this rate to 73.4%.
But while auction results have started to show a sure-sign of recovery, CoreLogic notes that auction numbers are considerably down to the same time last year.
“Sydney’s [demand to supply ratio] bottomed in early 2019. Hope has been building since then but obviously took a bit of a turn recently,” head of research at Select Residential Property, Jeremy Sheppard says.
“There's been a steep decline in the average Sydney discount over the 18 months to April. The gap between asking price and sale price has halved. That's a good sign of pent-up demand.”
Values held their ground in April with a 0.4% rise as per CoreLogic’s Home Value Index, yet prices have started to pull back in some regions. According to Herron Todd White’s Month in Review for May, Sydney has now transitioned into the ‘starting to decline’ phase.
Strong auction results
Meanwhile, Sydney’s auction market continues to lead other states in terms of clearance rates.
Over the recent weeks, the New South Wales capital have consistently reported clearance rates of above 70%. Leanne Pilkington, president of the Real Estate Institute of New South Wales (REINSW), says this indicates signs of confidence from potential buyers.
“REINSW member agents and auctioneers indicates that properties have been comfortably exceeding their reserve. As we know when demand outstrips supply property prices don’t tend to fall,” she says.
However, Pilkington says vendors are still testing the waters due to the uncertainties brought about by the COVID-19 outbreak.
“Lack of stock could well be the issue for the market as purchasers are still keen to buy. Hopefully, that will turn around once vendors come to understand that the world hasn’t collapsed,” she says.
“Property is a long-term asset acquisition; it cannot be lumped in with share-market volatility. We cannot predict what will be happening in the housing market in six months’ time, but the data makes it clear, it is not collapsing around us right now.”
