Sydney’s property market bounced back this weekend, as the nation’s most expensive city recovered from its worst-performing weekend for auctions this year.
Preliminary results for the week ending May 6 showed an auction clearance rate of 66.9 per cent in Sydney, according to CoreLogic. A total of 774 auctions took place in Sydney over the weekend and of the available results 374 properties sold at auction, with 185 failing to sell.
The figures represent a comeback from the previous week’s auction clearance rate – the lowest of the year – at just 55.8 per cent.
Nationally, the weighted average auction clearance rate increased to 63.5 per cent, up from a yearly low of 60.3 per cent for the previous week. The figure is down nearly 10 per cent on the previous year, when the weighted national average was 73 per cent.
So what do recent auction clearance results say about the current state of the housing market?
According to CoreLogic property commentator Geoff White, the fact that we’re in a market with auction clearance rates oscillating around 60 per cent is a good thing for all involved.
“My reading of the market is we’re in a situation where it’s a balanced market for buyers and sellers,” Mr White said.
“When you’re in that situation traditionally you’ll see clearance rates at something in the high 50s to low-to-mid 60s. When you see a clearance market of 70-80 per cent it’s not balanced, it’s a seller’s market.”
The housing markets in Australia’s two most expensive cities are gradually readjusting themselves, Mr White said. It’s good news for those looking to buy after years of soaring prices and a growing affordability crisis.
“There’s no doubt the Sydney market has cooled to a greater extent than the Melbourne market. That’s been evidenced by a number of things, particularly the home value index,” Mr White said.
According to CoreLogic’s Hedonic Home Value Index, the Melbourne median house value is $828,720 and $574,388 for units. In Sydney, the median value for houses is $1,033,892 and $756,557 for units, significantly higher than the national average of $695,328 for houses and $575,798 for units.
“Over the past 12 months we’ve seen home values in Sydney effectively fall 3 per cent, whereas in Melbourne there’s still been a rise,” Mr White said.
“Sydney has definitely cooled a little bit faster, and we’ll more than likely be seeing more mid-50s auction clearance results.”
The nation’s two largest housing markets are experiencing a “soft landing”, Mr White said, with Sydney and Melbourne property prices tempering after a long period of record growth.
“It’s a readjustment. I’ve been in real estate over 30 years and I can tell you this is what I would call a soft landing compared to many other times when there’s been downturns in the property market and it’s virtually stopped. That’s not the case,” Mr White said.
“It could be said that 12-18 months ago the market was going at an almost unsustainable rate, and something had to happen, so it’s cooled.”