More than 30 per cent of auction properties in Sydney failed to sell at the weekend as wary buyers opted not to compete for second-tier houses and apartments.
B and C-grade properties (unrenovated, on main roads, near commercial and industrial sites) almost always do well in a boom market. But experts say Sydney is returning to a “normal” market in which real estate transactions are being driven by traditional factors such as a demand for larger family accommodation or a need to downsize, rather than straight-up property speculation.
The big spin-off from these changed market conditions is that the second-best properties aren’t selling nearly as well as they did late last year.
Some agents selling “move straight in” renovated homes above $2.8 million also say properties are now more likely to sell for a price within their price guide, and the market is seeing fewer tearaway results compared to 10 months ago.
For the second week in a row, Sydney’s auction clearance rate fell below 70 per cent. The Domain Group posted a clearance rate for Saturday of 67.9 per cent per cent from 675 scheduled auctions.
The result – the lowest clearance rate recorded on a non-holiday weekend in Sydney since April last year – suggests that this year’s spring market, which kicks off next Saturday, will be more buyer-friendly than the 2016 and 2015 spring markets.
112 Cardigan Street, Stanmore, sold for $3,075,000 on Saturday.
Of course, much will depend on the parts of city that property punters target. Home prices in in-demand areas in the inner suburbs, such as the east, the inner-west and the lower north shore, are relatively bullet-proof compared to the prices being paid in more fickle markets, especially in the mid and outer western suburbs. Related: Rundown Clovelly home sells for $3.4mRelated: Click here for Saturday’s auction resultsRelated: Click here for the Market Snapshot
Real Estate Institute of NSW president John Cunningham said gaps were appearing in the market, particularly around properties that didn’t tick all the boxes for buyers.
“In booming conditions, everything goes well,” he said. “It doesn’t matter whether a property is on a main road, hanging off the side of a cliff or in a gully. Those properties normally would have trouble selling and now we are finding that the days on market for those sorts of properties is starting to extend out. It is definitely affecting their prices.”
Mr Cunningham, a Balgowlah and Manly-based agent, said agents were seeing a trend where only those auction properties that had multiple positive attributes attracted five or more bidders.
“When a market changes, you see the urgency go out of buyers,” he said. “They just don’t grab anything because the market is racing away, they become more discerning and I would definitely call this a more discerning market.”
Sydney has experienced five years of fairly constant house price growth. Little wonder that a veritable platoon of market watchers is now pointing to a change.
For example, the national valuations company Herron Todd White, earlier this month ranked Sydney as “starting to decline” in the national property clock it publishes monthly. By contrast, Melbourne’s market was ranked as “approaching the peak of the market”.
The most expensive property sold on Saturday was 1503/61 Macquarie Street, Sydney, which went for $7,110,000.
Some observers think it’s wrong to read too much into any differences between A-grade and lesser-light properties, particularly when it comes to high land-value real estate in the inner areas.
Domain Group chief economist Andrew Wilson said while there were different demand drivers for particular property types, such as semi-detached terraces and bigger houses, the inner ring remained largely bullet-proof.
“There is not so much differentiation between the inner suburban properties in Sydney that you can start classing them because they all have a line of buyers behind them,” he said.
But Dr Wilson said the inner west market had been a little softer in recent weeks.
On Saturday, Cobden & Hayson auctioned a renovated and extended five-bedroom period home at 112 Cardigan Street, Stanmore, which last sold in 2012 for $938,000.
32 Colbran Avenue, Kenthurst, sold for $4 million on Saturday.
Although the property was eventually bought by a family for $3,075,000, the auction was a slow-moving affair.
Selling agent Jonathan Hammond said the house was quoted at $2.95 million to $3.2 million and there were three registered bidders.
“We struggled to get it off the mark,” he said. “There was a vendor bid at $3 million and that was rescinded. Then we had a buyer who came in with $2.9 million and then we negotiated to $3,075,000 after the auction. But, in terms of per square metre land prices in Stanmore, the price paid was a great result.”
Top sales reported at the weekend included a five-bedroom home at 32 Shadforth Street, Mosman. It was sold for $5,675,000 by Simeon Manners, while a six-bedroom house at 32 Colbran Avenue, Kenthurst, was sold by Lumby Hampson for $4 million.
32 Shadforth Street, Mosman, sold for $5,675,000 on Saturday.
The most expensive property reported sold at auction was a three-bedroom unit at 1503/61-69 Macquarie Street, Sydney. It fetched $7.11 million at an auction conducted by Morton Circular Quay.
Dr Wilson said Sydney was experiencing a clear disparity in regional results with inner suburban areas doing much better than the middle and outer suburbs.
The lower north shore was the best performing region at the weekend with an upbeat clearance rate of 81 per cent. It was followed by the upper north shore with a 75.5 per cent clearance rate, the city and east with 72.2 per cent, the inner west with 71.9 per cent, the northern beaches with 70.8 per cent, the central coast with 66.7 per cent, and the west with 65.9 per cent.
Canterbury Bankstown was a significantly better performer at the weekend with clearances at 60.5 per cent. The north-west had a clearance rate of 58.8 per cent, the south had 55.2 per cent and the south-west trailed the market with a clearance rate of 50 per cent.
This story Administrator ready to work first appeared on Nanjing Night Net.