Real estate Sydney: Why the property market is bottoming out

Homebuyer confidence is returning to the battered Sydney property market, with hope the worst may soon come to an end.

OPINION

The most common questions I get asked by buyers and sellers are: “What do you think the market is going to do now?” and “How much more will it drop?”

Two months ago, I was uncertain on how to answer that, but now things are clearer.

If we are not at the bottom already, we are very close to it.

Here are the four reasons supporting my view:

WHY SYDNEY’S REAL ESTATE MARKET IS BOTTOMING OUT

1. The clearance rate is higher

For the last five weeks we have seen the clearance rate remain over 60 per cent This is a clear sign that buyers are no longer scared of overpaying. This fear was a dominant factor for most of 2022.

Sydney’s auction clearance rate is remaining steady, over 60 per cent. Picture: Julian Andrews

2. More buyers are making more offers

Buyers have been very cautions this year. But in September, more buyers started making offers as they became concerned that if they did not buy now, the banks would reduce their borrowing capacity. A buyer’s borrowing capacity has dropped more than property prices have declined.

3. Increased numbers at open for inspections

The first week of opens is usually the most popular. Earlier this year, many agents reported having very low numbers at open for inspections, but some properties are now getting 30 groups through in week one. Buyer activity and appetite has increased.

4. Super spring volumes are dormant

Agents and auctioneers are saying what the data companies are saying. We did not get the big influx of Spring listings as expected. Real estate pricing is a simple demand-supply equation. The lack of stock has eased price declines.

Tom Panos says buyers should look to purchase a home within the next six months. Picture: John Appleyard

HOMEBUYERS HAVE RETURNING CONFIDENCE AND PREDICTABILITY

There is no doubt we have bumpy roads ahead, and the market has already factored in more rate rises.

But a latest rates increase of 0.25 per cent instead of 0.5 has sent a positive message that we may be coming to the end of interest rate rises and this has given buyers some sort of confidence and predictability.

Unlike other property downturns where we have seen the market turn due to higher interest rates and high unemployment, this time round, buyers are not too worried as they can easily pick up an extra job if mortgage payments are heavily impacted.

My advice to buyers right now, is to buy within the next three to six months. Because even if you are not buying at the bottom, you’re buying near the bottom.

Right now, buyers are getting a 15 per cent discount compared to earlier this year.

Tom Panos is an auctioneer, real estate coach and trainer.