After two years of soaring values and incredible sales results amid poor affordability, tighter lending and higher fixed interest rates, Sydney’s pandemic-induced real estate boom is officially over. The year began with vastly improved buying conditions, as the divide between sellers’ expectations and what buyers were prepared to pay began to widen.
At the beginning of the quarter, Sydney’s inventory levels normalised, and sales listings were 12% below their five-year average. Despite this drop in supply the large proportion of potential buyers moved on from the frenetic “fear of missing out” of last year’s bull market and firmly switched to a fear of overpaying. Paired with the buyer sentiment that more price drops were on their way, they were prepared to sit on the bench and wait it out. The effects of this change in mentality was felt across the board, with 70% of all scheduled auctions withdrawn or passed in. Adrian Tsavalas of Adrian William gave his view, “Sellers were pulling their homes off the market if they didn’t get their price, however, sellers who were committed to a purchase or in a position where they had to sell were meeting, and in turn, slowly re-setting the market”.
The auction clearance rate through March softened week on week as the number of properties listed for auction significantly increased. As supply vs demand heavily came into play, the market was flooded with 100% more listings than the same time last year. With an auction clearance rate near to 50% it reinforced the presence of a downward pressure on prices that forced many sellers to adjust their expectations to secure a buyer. By the close of the quarter there were more price guide reductions and auctions either pushed back or withdrawn than in the past collective 2 year period.