Sydney fires up
A year ago Sydney's auction clearance rate had slumped below 50 per cent, but this weekend the post-election buyers came piling back in, and the preliminary clearance rate rose all the way up to 75 per cent.
Source: CoreLogic
The highest clearance rates according to MyHousingMarket were in the inner west (88 per cent) and upper north shore (87 per cent).
And as anyone active in the market will know, there is comparatively little quality stock coming onto the market for buyers to squabble over, with new listings down by about a quarter from a year ago.
Source: CoreLogic
Market action is still patchy and the usual disclaimers apply, but the Sydney downturn is now over and prices in the established dwelling market are rising.
High-rise woes
For years I've cautioned about the great surge in 'high-rise' units being constructed in Sydney's inner south, Parramatta, and certain other parts of the city.
Similar trends have played out in parts of Melbourne and Brisbane, though the respective peaks came and went a little earlier in those cities.
If you've followed my posts over the years you'd recall the paradigm shift towards high-rise apartment approvals really began to hit its straps from around 2012, in part driven by Chinese capital flight and investors from the Chinese mainland.
Given that the annual peak for approvals in Sydney didn't happen until 2016, you might expect any related 'teething troubles' to continue for quite a while yet.
My main issues of concern for investors included that land-to-asset value ratios are low, that almost by definition there's no point of scarcity in the product, and moreover these types of units are simply not proven performers.
What I hadn't reckoned with quite so much was the reputational risk that's now gathering a head of steam as another new high-rise unit block was evacuated this week due to safety concerns.
This time it was at Mascot Towers in the burgeoning airport district; last time it was the Opal Tower further out west at Sydney Olympic Park.
This appears almost certain to redirect demand back into the more established locations and property types. Caveat emptor.
