First Home Buyer

Sydney Auctions Decline

The housing market of Sydney is showing signs of decline due to high property prices and increasing interest rates. Figures from Residex show that the rate for auction clearances went down from 73.5 percent to 62.5 percent. This nosedive follows a rough start to the property year wherein clearance rates are within 80 percent during the first three months.

Due to these figures, Residex managing director John Edwards said that high property prices, interest rate hikes and the European economic crisis have contributed to this sharp drop. He also added that though it is normal for clearance rates to drop during this time, a ten percent fall since the last interest rate hike is surprising.

Edwards also mentioned that the price drop in the property market’s lower end during the first half of the year means that the poor buyers might be stressed in finding a property that would suit their means while the medium and upper niche of the property market may continue to perform well.

To deepen the misery, property prices in Sydney increased by 17 percent from April 2009 to April 2010. Edwards claimed this figure to be a remarkable one since the average annual price increase in Sydney is 6.7 percent. This significant increase contributes to the decrease of the clearance rate. Cooley Auctions alone have their clearance rate take a nosedive from 80 percent to 50 percent.

Auctioneer Damien Cooley said that the auction market is losing steam and that biddings have not been as hotly contested as they were in February, March and at the start of April. Also, Yoness Blackmore felt the auction market slowdown after her house in Manly was passed by at $1.125 million. Her three-bedroom property is in a popular suburb that is close to shops, beaches and transportation routes.

Because of which, Blackmore felt disappointed because she has psyched herself up that the property will be sold but she felt that the listing for the property is a case of bad timing due to holidays in school and the Anzac Day. However, their property now has two potential buyers since it has been passed. These two buyers have also experienced problems in selling properties of their own.

However, a property in Fairlight was sold for $1.44 million last week. This closing rate is $240,000 higher than what the property vendor paid 11 months ago. Also, a two-storey property in 24 Arthur Street was sold for $1.44 million after it was bought for $1.2 million in June 2009. The selling agent for both homes, Cunningham Property’s Georgi Coward, was amazed that the Blackmore property was passed.

However, Coward commented that prospective property buyers are not jumping so much into property buying for people tend to be more cautious during interest rate hikes. Another odd example of how the auction market is working is the two-bedroom brick home in Kyle Bay that was sold for $1.13 million though it was just worth $418,000 in 1997.

McGrath St. George selling agent Sasha Tavic finds the developments crazy and she said that most buyers cannot keep up with the big increase in property prices and there is no end in sight for it. She also added that this growth scares potential property buyers.