Stock levels have disappointed buyers in recent years. Like a broken record, Sydney’s statistics have told the story of persistently low property volumes. The monthly CoreLogic commentary states ‘below 5-year average’ regularly in the monthly property publication. However, could things be different this year? Facing a higher interest rate environment with reduced borrowing power and climbing inflation, will we see more properties listed for sale? We examine the trends in the market and insights from industry experts to help you navigate the 2023 spring Sydney property market.
Total Stock is Low
Taking an in depth look into Sydney’s listings, the total volume of stock in the 4 weeks ending August 13th 2023, was down 7.2% compared with the previous 5-year average according to CoreLogic. This downward trend is consistent across all the capital cities.
Tim Lawless, on The Property Couch Podcast confirms that vendors have been sitting on the sidelines. He believes that this is partly because there is insufficient social proof to stimulate the market. The theory is that there are not enough examples of vendors cashing in on the market conditions to entice other would-be vendors to do the same.
As buyers’ agents, we have seen this situation unfold over the previous 12-18 months. We have often heard that vendors are not in a rush to sell unless the market takes off, particularly if there is no burning reason to sell. When listings are low, our relationships with agents are a major asset for our clients. There will always be a natural turnover of properties due to vendors upsizing, downsizing, and changing work or family commitments. The key is knowing which agents to stay in touch with and who has the best reputation within each segment of the market so that we can find the right properties faster.
New Listings are Rising
Typically, we see an uptick in properties listed for sale in early spring, every year, as vendors prepare to sell their properties in the best light and warmer months of spring and summer. This year however, we are seeing an additional boost in activity, with Sydney recording an increase in the flow of new listings by 10.9% in the 4 weeks ending 13 August 2023 compared to the same period last year. Reviewing the flow of new listings, Sydney has recorded an increase of 22.6% compared with the previous 5-year average to the 4 weeks ending 13 August 2023 according to CoreLogic.
The increase in new listings could be a sign of mortgage distress with record low fixed interest rates rolling on to much higher variable rates. On the Property Couch podcast, Tim Lawless says that if we continue to see an uplift in new listings, which is a key indicator of supply, the market, which has to date been underpinned by lack of stock, could start to rebalance. Tim speculates that buyer demand in certain areas may not lift as quickly as the flow of new listings. He says that this will be due to sentiment and difficulties in obtaining credit.
As Sydney buyers’ agents at the coal face, we are seeing a slight rise in the number of properties available to choose from overall. We are also noticing a larger amount of pre-market and off-market properties being listed for sale.
The influx of new listings is welcome news for buyers who have struggled to get their hands on quality properties and who may have experienced heartbreak when competing against other buyers. With an increase in the number of properties for sale and an expectation of property prices rebalancing, or at least, a slowing in growth, buyers can accelerate their property searches with renewed confidence.
Beware Overpriced Off Market Properties
While this spring may present an exciting prospect of greater property choice compared to recent months, buyers must still be diligent in their searches. Buyers should be mindful that not all off-market properties will be a good buy, and it is important to understand why the vendor is selling. The reasons why vendors decide to sell off market can vary. Reasons can include owners opting to avoid marketing costs or disruption caused by open for inspections each weekend, or the vendor may be opportunistic about testing the market before committing to a public campaign. If the volume of new listings increases and demand remains stable, be wary of overpriced properties and be discerning about your own pricing assessment of the property.
More Listings Do Not Necessarily Mean More Properties in Your Search Parameters
Even though the flow of new listings in Sydney is trending upward, it may not be reflected in every property segment, so property buyers could still face extreme competition at certain price points and property types. For example, we have noticed that whilst unit listings have increased throughout the Inner West, blue chip family homes are still tightly held.
The prospect of more properties to choose from in the Sydney market should be exciting news for buyers and investors. However, there are always challenges to finding and securing the right property. If you would like a property expert on your side to guide you through the process of finding and selecting your next home or investment property, call Nick Viner on 0405 134 645.
