21/09/2018
Welcome to this week’s Market Wrap
It was a slower weekend for auctions in Sydney last Saturday, with the city recording a published auction clearance rate of 53.2 percent which was slightly lower than the previous weekends 56.3 percent and well down on the 67 percent that was recorded over the same weekend last year.
The Eastern Suburbs held the second most auctions last Saturday with 52 properties that were scheduled to go under the hammer. The East was the third best-performing region of Sydney recording a weaker clearance rate of 59.6 percent.
Our local markets had a consistent weekend of auctions with 16 homes going under the hammer and 10 being sold either prior or at the auction.
Clovelly sold 2 out of 3 auctions either prior or under the hammer.
Coogee sold 2 out of 4 auctions.
Randwick had another strong week selling 6 out of 8 auctions.
Maroubra held the one auction that did not sell.
60 Minutes - Are property prices in Melbourne and Sydney really going to fall by 40 percent?
The simple answer is no.
I have had several conversations this week with concerned people regarding the segment run by 60 minutes last Sunday. It is no secret that we are experiencing a levelling of the property market or a “downturn” if that’s your preferred term. However, people quickly forget that this is off the back of 5 years of year on year double digit growth not ever seen before in many of our lifetimes. That type of growth rate was not sustainable, and a stabilising of the market was inevitable. If you follow the trend of any property growth cycle that has occurred in Australia, usually what follows is 1-3 years of prices either dropping or levelling.
Every few months, the media finds someone who’s willing to stick their necks out and offer a property market doomsday scenario, predicting the end of the world for property owners in Australia. This happens despite the fact such predictions have been proven wrong time and time again.
For a property market to crash (and that’s different to price growth slowing or the normal cyclically correction) you need desperate sellers willing to give away their properties at fire-sale prices and no one willing to buy them.
This means for a collapse of 40% or so; we need one or more of the following things to occur:
• A major depression (not just a recession), but neither the RBA nor any credible economist is suggesting this will occur in Australia.
• Massive unemployment with people not able to keep paying their mortgages — but instead, we’re creating more jobs than ever.
• Exceedingly high-interest rates so that homeowners won’t be able to keep up their mortgage payments — again, this isn’t on the horizon.
• An excessive oversupply of properties and no one wanting to buy them — but other than in a few locations this is not occurring in Australia.
The positive factors underpinning our property markets include:
• We have a sound economy in a developed nation.
• Our strong population growth underpins our economy and housing markets.
• We have an undersupply of new housing being built to cater for the population growth we are experiencing. Australia has a ‘business plan’ to grow to 40 million residents in the next three decades. Interestingly, most of these new Australians want to live in our four big capital cities, and in many cases the same suburbs.
I hope you enjoy this week's edition. If you would like further information, please contact me on 0431 654 270.
