Experienced researcher Louis Christopher has confirmed what others, including Hotspotting, are saying about the Sydney market: that all the signals suggest a slowdown.
Christopher, managing director of SQM Research, says there is compelling evidence that Sydney is slowing.
“There has been much talk about the slowing Sydney housing market, where it has become apparent that auction clearance rates have fallen,” he says. “Our take on the recent weekly auction clearance information is that it is indeed a strong indicator that the Sydney market is slowing.”
Hotspotting analysis of sales activity indicates that the Sydney market reached its peak late in 2014 and has been gradually tapering off since then. As is normally the case, it is taking time for this to be reflected in price data, which is typically at least six months behind the game.
Christopher says the evidence is more apparent and compelling when considering what the market was doing this time last year.
“On the weekend of September 27 2014, APM recorded a revised auction clearance rate of 76.9% based on 722 listings,” he says. “The preliminary result this weekend of 69.6% is unmistakably lower with more listings on the market (984). The revised number issued next weekend will likely bring this result down to about 67%.”
Christopher says clearance rates at their current levels simply means a return to “more normal market activity”, rather than heralding a downturn or price correction.
“The long-term average auction clearance rate for Sydney during spring has been in the order of the low 60’s.” he says.
Christopher says auction clearance rates tend to fall each spring, because there is a seasonal surge in listings at this time of year. This contradicts the propaganda from real estate agencies, which claim spring is the best time to sell.
“Auction clearance rates have fallen in each and every year during spring (compared to Autumn/Winter) except for one year,” Christopher says.
“For some reason, vendors think spring time is a great time to sell. Perhaps they think their garden is looking fabulous right now. Perhaps they wish to tie up affairs prior to Christmas. Whatever the reasons given, many vendors think this way and therefore it’s not such a great time to sell as everyone else is selling!
“Certainly, there is little evidence there are more buyers in spring. If anything, the data suggests that buyers tend to come out in early autumn through to early winter.”
