It’s funny how consumer sentiment can have such a large impact on the property market. To a certain extent I can understand the reaction at the end of last year. There were several media reports warning of potential tough times ahead, the banks and the RBA were going in seemingly different directions and the APRA restrictions I’ve mentioned previously put the brakes on a market that was flying.
Ultimately consumer’s lacked confidence due to perceived uncertainty and the flow on effect was a market in flux.
So fast forward to February 2016; after a hibernation of sorts it seems things are easing back to a normal pace. The lead up to, and the first auction weekend were always going to be a good barometer of market sentiment. I spoke to a number of agents in different parts of Sydney who all reported the same thing we have been experiencing. There is a degree of caution still in the air however buyer numbers had increased from Q4 last year and mixed with that caution was a sense of optimism and comfort in the market and values.
Essentially the consensus was that the summer break came at an ideal time and it gave everyone the opportunity to pause and take stock of what had happened as well as look to the future. I’ve previously highlighted that the fundamentals in Sydney still remain positive (continued infrastructure, low interest rates, low vacancy rates) and it seems this may be a belief that has gained some momentum in recent times.
The first real auction weekend yielded a healthy clearance rate of 72.5% in Sydney. Sure the figure was down on the corresponding weekend in 2015 when everything was still booming, however it seems there was a good degree of consumer confidence coming back. The acid test would be the following week to see if this confidence carried over. Domain reported a slight increase up to 74.2% last weekend with an additional 141 properties on offer. Solid results.
Normally I’m not a big believer in clearance rates being a good market indicator however early in the year they serve an interesting purpose. These figures back up what we as agents are experiencing on the coal face of the market. There seems to be a realisation that despite the negative publicity last year the Sydney market should continue to be quite resilient in the medium to long term.
So whilst this sentiment change is aligning itself with what we felt would happen it is important not to get carried away. We are unlikely to see anything like the last couple of years in the immediate future however this comfort in the marketplace bodes well for a stable next 12 months.
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