During August we continued to see the local property market ease back from the intensity experienced throughout the first half of this year. With the exception of standout homes we are typically encountering fewer ready-to-act buyers in the market and more cautious buyer behaviour. Overall, prices remain stable but there is a lot happening both locally and on an international level which seems to be distracting buyers. This sentiment is being echoed throughout much of the inner city suburban ring and across the Eastern and Northern Suburbs, but to a large degree was well anticipated. What remains to be seen is how the market will react with more listings coming on line as we head into the warmer months of the year. Moreover, we are again seeing some agents over-promise and under-deliver with their pricing estimates. This is dragging down the local auction clearance rate, leaving some homes languishing on the market which destabilises buyer confidence.
To highlight this emerging trend, in our reported period and zone, 36 properties were earmarked for auction with 20% being withdrawn or postponed. We suggest there will be a growing list of disappointed vendors whose expectations have been overcooked by agents not adept at reading the changing market. In the past several weeks, we have been shocked to hear some of the pricing advice being given by certain agents who are regularly advising figures of 10-20% above our price estimates.
So where is the property market heading? Global head of economics for Macquarie Bank, Richard Gibbs, suggests we’re seeing shorter, sharper cycles in the property market. The time lag between indicators and actual events is shorter, so it’s increasingly important for investors, buyers, sellers and agents to move swiftly. Real estate strategist for Macquarie Bank, Rod Cornish, predicts a flattening of house prices in Sydney and price falls in Melbourne. Until 2004, residential market growth by state was reasonably synchronised. We’re now seeing greater variability between state markets. “Locally, our view is that affordability in Melbourne is at a tipping point and prices have peaked. In the past 12 months, Melbourne residential prices grew 27%. Sydney prices grew 16% however this followed a five to six year period of falling and then flat prices.”
Moving into Spring and with a variable marketplace, the quality of advice being provided by agents will come to the forefront. It will be easy to determine which agents and/or agencies are moving with the market, almost like reading the form guide of a sporting team. You only have to look at past performance to get an indicator of an agency’s credibility. In our reported zone, our company sold over 50% of all transactions, including the two highest priced sales, and maintained a 100% auction clearance rates as reported by Australian Property Monitors. We’ll be looking to maintain this performance throughout the remainder of this year and beyond by providing our clients with the highest level of market knowledge.
