Calm returns to frenzied Sydney market

By Terry Ryder, 4th June 2010

After a “very heated” start to the 2010 Sydney real estate season, recent weeks have seen “a welcome calm in the frenzy”, according to buyers’ agency Homesearch Solutions. 

Principal Henry Wilkinson says the market has come somewhat off the boil, partly influences by volatile stock and currency markets. This has been reflected in auction clearance rates going from well over 70% for March and April to around 60% in late May. 

“During the first few months of 2010, we saw an unprecedented surge in prices - the highest shor- term spike since we commenced operations in 1999,” Wilkinson says. “Many areas of Sydney saw rises of 15-20% between January and April, depending on the price segment and area. This has been as strong if not stronger than the gains to Sydney prices that we saw in the frenzy of 2002”. 

Wilkinson says the market has come off around 5% over the past few weeks and is likely to be in a “holding pattern” until world financial markets strengthen. “Provided financial markets stabilise, I expect the Sydney market to perform at a more realistic and sustainable level,” he says. 

Favourable contitions remain for the Sydney property market and these include:

• Economic recovery - a GDP growth rate of 2.7% for the year to March.• Unemployment low at 5.3%.

• Relatively low interest rates which appear to have now stabilised.

• High levels of immigration, stimulating demand for housing.

• Lag in property development, continuing an under-supply of housing.

• An expected continuation of the shortage of listings over the winter months.

• Lower Australian dollar, which has increased the purchasing power of expatriate Australians and foreigners purchasing Australian real estate. 

“A calming in the frenzy can only be a good thing for buyers and I believe conditions for buyers are now more favourable than they have been since mid-2009,” Wilkinson says. “A change in the buy-at-all-costs mentality of early 2010 has seen more sense return to the market and has created some good buying opportunities in the more measured market.” 

ENDS

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