The month in review: Sydney
By Herron Todd White
December, 2009
In relation to activity and price/ houses and strata titled
property (Units/townhouses/villa/duplexes) under
the $450,000 price bracket in the Penrith/ Blacktown/
Fairfield/ Liverpool/ Campbelltown/ Parramatta/ Auburn/
Holroyd Council areas and under the $500,000 price
bracket in the City, inner east, south-east and inner west
Mascot/ Zetland/ Alexandria/ Erskineville/ Newtown/
Pyrmont/ Ultimo, Glebe/ Rockdale/ Arncliffe values have
increased anywhere from 5% to 15%.
These prices peaked at the end of September 2009. As
predicted, since the reduction in the First Home Owners
Grant, there has been reduced activity and prices have
stabilised. Since the RBA have increased interest rates,
the residential market has softened. Discussions with
real estate agents have indicated that if the current trend
with interest rates are to continue (ie. in response to
inflation) then the mortgagee in possession market, that
significantly increased in activity after 2003, and has still
continued up’ till now could potentially intensify moreso
than seen in the previous 5 years. As the majority of
first home buyers have utilised the increased grant as a
deposit, they may not have factored in significant interest
rate rises.
It would appear that this would be more of an issue in the
south-west region of Sydney than at the higher end of the
market in the eastern suburbs.
As predicted, the higher-end market continued to
struggle with the fallout of the Global Financial Crisis and
the stockmarket crash. This, combined with job losses in
the finance industry, and the lack of available funding
from the major banks, has drastically reduced the amount
of potential purchasers in the marketplace.
The first home buyers market did significantly improve
and increase in price. However, as soon as the grant was
reduced, the market stabilised.
Within the last few months of July to September, the
second home market purchaser appeared to venture
back into the market, at present, less activity.
Recently, the RBA’s policy of reducing inflation by
increasing interest rates has softened the market and
reduced consumer and business confidence.
Banks and anyone who still had a job and money to
spare were taking advantage of the ‘fire sales’ occurring
in Sydney’s lower north shore and east. Another winner
this year were the vendors of property below the median
house price.
Potentially, First Home Buyers who were caught up in
the ‘first home buyers’ hype and bought within the last
year may see themselves in trouble should interest rates
continue to rise. Fortunately, unemployment has not
risen to the levels predicted at the beginning of the year.
Holroyd City Council, in particular, the duplex market,
demand was surprising. Why? It was due to a wide variety
of property types in the council area, however, the duplex
market increased significantly in comparison to other
property types.
Second properties – the holiday house down the coast,
or the ‘bolt-hole’ in Sydney – were offloaded by vendors seeking to shore-up their capital base after stockmarket
and/or job losses.
The Sydney region has benefited from the increased First
Home Owners Grant, particularly with increased activity
and subsequent value. As predicted, once the grant was
reduced the market steadied. No decrease is evident yet,
as low supply keeps prices steady.
After weakened activity in the first 6 months of the year,
the higher end of the market appears to be bouncing
back, along with the stockmarket.
Whilst data is limited and basic buyer sentiment is
measured on a weekly basis, a trend cannot be identified
as yet. With the increased interest rates and RBA trend of
going too far, we potentially see the local economy being
affected more than it was in September/October 2008.
The potential still exists for unemployment to increase
and for consumer/business confidence to remain low. |
