The spring selling season is upon us, but Sydney has entered into the highly-anticipated time of the year with a whimper, rather than a bang.
While the beginning of the year started out very similarly to the booming auction market of 2016, with seven in 10 homes selling under the hammer, things have changed rapidly over the past three months.
Last year, the auction market became hotter as the year continued – with more than 80 per cent of homes selling at auction by the end of August. But this year the market has shown signs of slowing – just 68 per cent of homes sold at the close of the month.
Experts say this signals a turn away from a boom market and towards a “normal” environment with lower levels of price growth and a balance of power between the buyer and the seller.
It’s also likely a signal that the much-awaited “spring selling season” won’t be markedly different from the winter – a traditionally quiet selling period, Domain Group chief economist Andrew Wilson said.
This weekend there are 715 auctions scheduled, compared to 637 at the same time last year, but experts say there’s no room for momentum to build. In 2015, there were 955 auctions on the first September weekend, followed by three “Super Saturdays” – where there are 1000 auctions or more on one day.
More than 30 per cent of properties failed to sell on the last weekend of August, and this trend could become more pronounced by the end of spring.
“It’ll be in the mid-60 per cent clearance rate range, perhaps 60 to 65 per cent, as the market has lost its energy.
“I doubt we’ll get a 1000 auction super Saturday this year.”
Real Estate Institute of NSW chief executive John Cunningham is also of the opinion that Sydney had an early selling season after a “phenomenal amount of stock” in August.
And with more choice already available for buyers, he said vendors were needing to meet the market’s expectations with fewer bidders at auction than in the past.
“In the boom, all homes were seen as A-grade, but now we’re seeing people paying different [prices] for A-, B- and C-grade homes,” he said.
In a further sign home owners aren’t expecting property prices to boom, he said people were now opting to sell before they buy – something that was causing a shortage of homes for sale in the past four years as vendors were too scared of prices growing while they looked for a home to buy.
SQM Research managing director Louis Christopher said the market was acting in a similar way to the second half of 2015, when the market slowed rapidly to lows of 57 per cent by the end of the year.
He expected that by October this year fewer than half of homes would fail to sell at auction, mirroring that pattern – and this could also coincide with a softening in property prices.
Property prices also fell towards the end of 2015 – dropping 3.1 per cent over the three months to December, the largest quarterly price fall on record.
“This slow period might not last that long yet it’s definitely a slower market … but it’s not entirely a buyer’s market and it’s not a slump,” he said.
And any falls in price seem to largely depend on the part of the market being considered, BresicWhitney director Ivan Bresic said, whose offices focus on the east, inner west and northern areas.
“For sales over $3 million demand is still quite strong. In the median $1 to $3 million range, it has come off a bit.
“It’ll take longer to sell these properties and there might be a slight correction,” he said.
He described the current market as a “transitional period” and recommended selling sooner rather than later with an anticipated softening in the market by November.
But Starr Partners chief executive Doug Driscoll, whose offices are predominantly in the Canterbury-Bankstown, west and south-west areas, said they had already seen prices plateau and in some instances falling.
“There’s a big difference in property types – for houses and apartments. I’m fully anticipating apartment sales will be difficult in some areas,” he said.