2018 marked the end of a sustained and unprecedented property growth cycle, witnessed the shocking revelations from the Banking Royal Commission and saw property prices fall across the country.
Property Prices Fall
It was clear that the peak growth cycles was over at the start of 2018 but by November 2018, the average Sydney property was being discounted by 6.8% and property prices had dropped by an average of 9.5% since the peak of July 2017. This drop, however, should be viewed firmly in the knowledge that median dwelling prices had increased by 51.0% in Sydney over the previous five years.
Auction Clearance Rates
The 17th February saw our first auction day for 2018 and a clearance rate of 73% for Sydney. By 15th December, clearance rates had dropped to 41%, the lowest clearance rate figures seen over the last seven years. The cooling clearance rates indicated that vendors were reluctant to discount their price expectations to meet the market and the reduced number of buyers out shopping with approved finance. We saw an increased number of sales transactions through private treaty sale instead of auction because this method doesn’t need hot competition like an auction.
Days on Market
Not surprisingly, properties began to take longer to sell and the days on market grew to an average of 47 days by November 2018 in Sydney. This was up from 36 days on market in October 2017. Proudly, we can report that John Higgins’ days on market for sales in Botany is only 29 days (source: realestate.com), an outstanding result in a difficult market.
Number of Properties on the Market
The number of new listings on the market has slowed this year but the total number of listings on the market in Sydney is higher today than it has been since 2011. Homeowners are reluctant to put their homes on the market due to the discount required to sell but the volume of properties on the market is increasing because properties are taking so much longer to sell.
Tightening of Lending
The Royal Commission outcomes led the Australian Prudential Regulation Authority (APRA) to request stricter lending standards and credit controls. As a consequence, loan approvals took considerably longer to process in 2018 and greater numbers of buyers saw their loan applications rejected or reduced.
Click https://bit.ly/2Ew9cbb to read our full 2018 Property Overview, detailing the main drivers of a very challenging year in property and what to expect in 2019.