There is no hiding from a disappointing Clearance Rate after the Auctions at the weekend.
I will get the negatives out of the way first, the percentage was around 63%.
The positives to take away from the weekend is that the Median sale price for property sold at Auction was reported at $1,154,000 which is quite a dramatically high median figure. Also, there were over 1,000 properties on offer across Sydney which may also have lead to a below – recent – average in the Auction markets.
There has obviously been continued scrutiny against the Real Estate market of late with intentionally misleading headlines and misconstrued information fed to buyers and vendors across the network of markets in Sydney.
Yes, our Auction clearance rates have dropped, there are more properties going to Auction, buyers are more savvy about their buying tactics and have more choice to quench this appetite for ‘perfection’, often missing properties because of it.
Yes, the growth in pricing may have been above average and the idea of this dropping is scaring people away from purchasing. What people are reading in context is that the GROWTH is set to HALVE – not the prices.
If the growth has been at above 20% per year for 2 years and is set to halve, then that means you may make 10% per year over the next 2 years. So, on a $1,500,000 purchase one may have gained about $300,000 each year over the last 2 years, which is a gross generalisation! However, the same logic would conclude that that purchase now may net $150,000 per year over the next 2 years – better than a punch in the face!
I would urge you to read negative NEWS with context in mind and consider that most people wont lose money in Sydney bricks and mortar unless there was some sort of forced sale for whatever reason, within a short period of time, with no capital improvements.
One person commented to me recently that interest rates are set to go up and this has a dramatic impact on prices as buyers will push back – please do some research and tell me when interest rates have ever been this low, they haven’t.
Just remember, if you are maxed out at borrowing $1,250,000 and the interest rate going up .25% will mean you cannot feed your children, don’t buy for $1,250,000 otherwise, enjoy the cheapest money we have ever had on offer.
I love Warren Buffett’s approach to business and investment and the one thing he does well is analyse his product, business or company separate from the market, if it is a good ‘product’ it is a good buy regardless of the market.
Thomas Merriman.
Thomas Merriman 