Firstly,
The unavoidable news, which I do not wish you make the theme of my report, but will most likely be, is that of the interest rate rise(s). On Tuesday this week, the Reserve bank once again increased the cash rate adding approximately $250/Month to the average mortgage in the Upper North Shore area, this could be as high, or even more than $1,500/Month.
As settlement data starts to flow through the market (this is sold price data of properties that have settled, often taking between 6-12 weeks to be reported) we are now realizing about a 10% drop in house prices in most parts of Sydney, this is also the case in the Upper North Shore.
During the 2018-2019 market correction, buyers simply disappeared, we would show up to opens to the sound of tumbleweed. However, the current correction is not driven by lack of buyer interest, competition or demand rather buyer affordability.
We are currently dealing with buyers who were inspecting properties with us in first quarter of the year with price guides for example at or above $3,000,000 who are currently making contract changes on $2,500,000 properties reinforcing the above. This is consistent across all price points in our marketplace. Not only are buyers borrowing less, they are faced with increased payments on what they can (which is factored into their borrowing capacity).
We need to read all these market changes in context though, we may have seen prices drop 10% across Sydney so far in 2022 However, last year in Pymble for example we saw almost 30% growth, up to 40% growth in Turramurra and 30% in Normanhurst
(for more suburbs and figures, let me know)
There are many ways to take advantage of trading in this type of market, for more assistance please contact me.
Local market:
We are getting questions from both sides of the market about supply v demand and how the low stock levels are impacting the market or last years prices were crazy due to low stock levels .
To give a few examples:
Wahroonga:
2021: 289 sales one of the highest sales years in 20 years of data
2022: Currently 118 sales tracking on average
Normanhurst:
2021: 81 sales one of the highest sales years in 20 years of data
2022: Currently 32 sales tracking on average
West Pymble:
2021: 78 sales one of the highest sales years in 20 years of data
2022: Currently 50 sales tracking above average
(for more suburbs and figures, let me know)
This is just an example of 3 suburbs that we service in the area, but every suburb is showing the exact same data. Prices were not high due to low supply last year and they are not low due to high supply this year. The opposite would be true. In fact, it likely comes back to interest rates and other economic factors.
Further to this, we were in a property cycle, true to most cycles over the past 20 years (or ever), we were due for a correction added to by lower interest rates pouring fuel on an upward cycling market fire. We are just seeing some water DUMPED on that fire at present.
Auction clearance rates are still up in the 60% range and buyer numbers are still very strong across all price points in the market.
Wider market:
The outer regions of Sydney including the South West and the Central Coast have remained steady this year with a lot of suburbs recording median price growth, while the rest of the state is going the other way.
Slowly, the higher-end properties are starting to see the trickle on effect of the market changes, this has taken quite a bit longer to filter through.
Finally, Brisbane has reported a downturn, at its fastest rate in history.
Distressed stock across the Nation has increased 15% in the last few months.
Home loan applications have started to slip, showing that we will start to see a drop in buyer activity filtering through the market as the above pressures start to take hold.
Interest Rates (RBA):
Increased .25% to 2.85%
The last cash rate increase was attributed to record high levels of inflation, currently 7.3% and tipped to hit an 8% high. The cash rate increase is supposedly implemented to lead us to an annual inflation rate of around 3% in 2024.
The Reserve bank have ended their statement with a positive note on wage growth and lower job vacancy rates. However, also added that there were more rate rises to come.
IF you would like a report on your suburb, please reply and I will send a copy straight over.
Thomas Merriman 