Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Sunday, 31 May 2015

Weekend reads

Weekend reads

Catch up on the most interesting reads of the week, summarised by Michael Yardney at Property Update here.


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Sydney market accelerates

If I've read one article about a Sydney property market slowdown over the past two years, I must have read a thousand.

The latest call has been that a decline in transaction volumes must mean that the market is set to decline.

As noted here previously, the only way one could arrive at that conclusion could be if you've never been in the Sydney market (or, for that matter, never been to Sydney).

Auctions and viewings have been packed out relentlessly, with queues consistently out the door and round the corner.

"Slowdown"?

The reason for the "slowdown" in volumes is a woeful dearth of stock on market, with anything half decent being pounced upon by buyers.

We have reached an awkward stalemate situation whereby owner-occupiers are unprepared to list property due to there being nowhere to move to, while investors have become unprepared to sell due to rising prices.

Of course, this will change in time with more listings expected over the months ahead.

But for now there is a major imbalance in the market, which is pushing prices northward apace.

The population of Greater Sydney is now well over 4.8 million and rising, yet there are fewer listings than in Melbourne, Brisbane and even Perth.

 

Only 17 per cent of capital city listings nationally are in Sydney, which is painfully low.



Imbalance

Yet the data sets I have analysed here previously of mortgage finance and investor lending finance shows that record mortgage volumes are being written in New South Wales at the present time.

There is no slowdown in the Sydney market.

If anything, activity that I have seen in the past few weeks has implied an acceleration.

Yesterday's median auction price in Sydney was an extraordinary $1.18 million.

Of 657 reported auctions for the week, 597 sold under the hammer, giving a preliminary auction clearance rate of well over 87 per cent.

They figures may or may not be revised down to the low-to-mid 80s range in due course, but any way you look at it, it's a boom-time market.

Scrolling through some of the example sales reveals some blistering results in the inner suburbs in particular.

This is essentially as high a range for auction results as we have seen in Australia - all-time record levels. 

"Hat tip" to the one commentator who has consistently called this Sydney property cycle accurately: Louis Christopher of SQM Research,

Fair play. I, for one, will be following his newsletters more closely in future.