Property markets cool but Sydney still attractive in 2015
The Sydney property market was hot in 2014 and the forecast is that after a sweltering start to 2015, temperatures will start to cool down. But two industry experts encourage buyers not to be put off and predict sales will still be impressive.
Already, Sydney has experienced record high auction clearance rates and it is predicted that high bidding will continue well into March. This suggests low interest rates are having a beneficial impact on buyer confidence and enthusiasm.
Rocky Bartolotto, Director and Chief Auctioneer at Auction Services, said there are no alarm bells; it’s still a good market and you can buy with confidence, “Sydney recorded the strongest auction clearance rates in the country in 2014, and it was a record year nationally with around 100,000 auctions. This reflects buyer demand. This year, where we would typically see activity quiet down between April and winter, I anticipate the opposite.”
Rich Harvey, CEO of propertybuyer.com.au, says Sydney is undoubtedly the top option and investment in 2015 can still be a gainful move for buyers.
“I would expect a 7 to 10% return in 2015 if current low interest rates and low borrowing costs stay on track. There’s a 50/50 bet that rates will drop again and that will make it attractive to upgrade or invest,” said Mr Harvey.
Despite the low interest rate environment, it is anticipated that the rate of growth will continue to slow through 2015. CoreLogic RP Data expects dwelling values will continue to appreciate in 2015, at least across the combined capital cities, however the rate of gain is likely to be slower over the coming months.
This seemingly provides some insight into the likely performance of the housing market over the coming years. Although mortgage rates are at historically low settings and may move even lower this year, we are already seeing the rate of home value growth slowing in all cities (The CoreLogic RPData Home Value Index).
The message to buyers? “You can sit and do nothing or get in and enjoy the ride,” says Harvey. “Sydney is a fabulous city with a long list of features: great climate, extended summers, national parks, harbours, beaches…but supply levels are very tight. RP Data shows new listings are down around 10% compared to last year; Sydney has always been undersupplied, it’s a sellers market.”
Bartolotto echoed this notion, “A lot of properties traded in the last quarter of 2014 but buyers can still be confident; if they bought last year they will have already made money. It will not be as high this year but we are in a good market. There’s a lot of hype about things slowing down and cooling off.”
Sydney still holds the spot as the city with the highest rate of capital gain and has also shown the highest aggregated capital growth of any capital city in the years since the global financial crisis.
So far, 2015 auction clearance rates are impressive and slightly up on those recorded at the same time last year, although this year there have been lower auction volumes. Each week in February has seen clearance rates 80 per cent and above. The impressive auction clearance rates should encourage a few more vendors to list for sale, and clearly there is strong demand.