We are starting to see some data sets showing a rise in the number of property listings in Sydney over recent months.
Firstly, we need to be careful to recognise that last year’s undersupply of stock on the market was unusually constrained, so any annual percentage changes need to be in the context of coming off a very low base.
On the ground in Sydney, it certainly does not feel like there has been an avalanche of properties suddenly available for sale – well, not quality ones anyway.
In the areas that we are most active – such as the Hills District, Inner West, Eastern Suburbs, North Shore, Northern Beaches, Central Coast, Wollongong and Newcastle – the opposite is true.
That’s because we are always seeking the best quality dwellings in the most desirable locations within our client’s budgets.
In our experience, over recent weeks, there has been a notable reduction in investment grade properties priced between $1.5 million and $2 million in our Sydney homebuying locations.
Conversely, we are starting to see a rise in the volume of inferior dwellings hitting the market.
This could be due to sellers wanting to offload second-rate properties while market conditions remain mostly firm, but it could also be because of financial issues due to the rapid rise in mortgage repayments over the past few months.
Whatever may be the reason, we are seeing less attractive stock being brought to market by vendors, however, many have not caught up with market reality, yet, so they are often sitting unsold for several weeks, too.
An indicator of this situation is the latest SQM Research, which found that the number of old listings on the Sydney market (greater than 180 days) had risen by 5.7 per cent since this time last year – the highest percentage result for all capital cities.
As you are no doubt aware by now, the cash rate has been ramped up to 1.85 per cent since May and is now at the highest level since April 2016.
Again, it’s important to understand this interest rate in the context of historical averages because it remains moderately low.
Of course, anyone who purchased property before the pandemic as well as those of us who have been homebuyers and investors for decades, has experienced significant capital growth over those periods of time.
Plus, our banking system is one of the most rigorous in the world, because all mortgage applications include a buffer servicing assessment to ensure borrowers can continue to afford repayments in higher interest rate environments.
Unfortunately, some buyers who may have got caught up in last year’s euphoria and paid, as well as borrowed, far too much may find themselves in a little strife.
We are also starting to hear of a number of sale contracts falling over because the buyer was unable to secure finance now that interest rates have risen.
Every homebuyer or investor that we work with must be pre-qualified, including a pre-approval for finance, before we begin helping them secure their next home or investment property.
In softer market conditions, as well as a tighter lending environment, this means that sales agents are actively wanting to work with qualified buyers and experienced buyers’ agents.
They seek us out because they know that our clients are ready and, most importantly, able to purchase a property, rather than taking a chance on someone who may ultimately fail to secure finance and they have to start all over again.
It is for this very reason that qualified buyers are ahead of the pack currently – and for some time to come, too.