Sydney’s property boom is ‘officially over’, experts say

After two years of soaring values ​​and incredible sales results, experts said Sydney’s pandemic-induced property boom was “officially over”.

After two years of soaring property values, experts have said Sydney’s pandemic-induced property boom is “officially over”.

Talk to The Daily TelegraphAuctioneer and real estate industry coach Tom Panos – who calls around 15 auctions each weekend – said there had been a significant change in market conditions in recent weeks.

Auctions in NSW capital go ahead with no opening bids, clearance rates drop and more properties accept earlier bids as terms may only tighten if interest rates rise later this year as planned.

“The boom is 100% over. In February, we went from crazy to normal,” Panos told the newspaper.

“Now, if you ask me, as we go from March to Easter, we go from normal to lows.”

While properties over $10million are showing resilience, “90% of the rest of the properties in NSW markets have been impacted,” Mr Panos said.

“In September, there was the fear of missing out, but now for shoppers, the fear of overpaying has replaced that,” he explained.

Now that buyers have more options – new property listings are 13.2% higher, according to REA data, than at the same time last year – “sellers who have a good reason to sell reduce the price to respond to the market,” Panos said. .

“Those who don’t have a good reason to sell wait for the market to get back to where it was and they spend their days in the market,” he added.

“It’s really clear that the party is over.”

The first sign that Sydney’s turbocharged property market is slowing came this week, when data from Domain revealed on Monday that more than one in ten homes were selling for less than their original price.

It is estimated that 10% of homes have to be sold at a significantly reduced price due to this phenomenon – which is believed to be caused by a saturated real estate industry, with too many people wanting to sell and not enough buyers to go around.

At the height of last year’s property boom in July, that number – 10.5% – was half that, with just 5.9% of homes needing to discount their value to buy.

Echoing Panos’ sentiment, Domain’s director of research and economics, Dr Nicola Powell, told that buyers were becoming more demanding, leading to a slowdown housing.

“Buyers are increasingly careful not to pay too much [for a property] rather than paying for fear of missing out. We entered 2022 with much better buying conditions,” she said.

Sydney Buyers’ Agent Dan Grantham said The Daily Telegraph “there is a big gap between what sellers expect and what buyers are willing to pay”.

“Buyers are more demanding now. Going to auction is no longer a bad thing as more properties have been mispriced by agents,” he said.

“If an agent asks too much, there will be a discount or two and other buyers will then have a bad impression of the property. This presents an opportunity.

While “demand exceeded supply last year”, there are now too many homes on offer, Dr Powell said, meaning “we are seeing a drop in demand and the number of views per listing has been reduced”.

The latest data from REA came to similar conclusions, identifying 54 suburbs in the Greater Sydney area where median values ​​have peaked in recent months and have now fallen.

“That rate of growth has slowed down, the peak is gone,” said REA’s head of economics research, Cameron Kusher. The Daily Telegraph.

“I think we’ll see more declines in more suburbs, especially if interest rates go up.”

Dr Powell also said she expects to see more homes forced to re-list at a cheaper rate if interest rates rise later this year.

“We are likely to see it [the number of discounted houses] trail higher as we see the market slowing further,” she said. “I think we’ll probably see it increase proportionally.”

– with Alex Turner-Cohen

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