Sydney real estate market ‘close to bottoming out’

Sydney’s real estate market has started the year stronger than 2022 finished and here’s an emerging view that the bottom of the market may be here sooner than anticipated.

OPINION
The new year sales market has seen a strong start, which is not entirely unexpected given it's the typical seasonal occurrence.

It is a little too soon to say the market resilience will remain, but estate agents have been almost unanimous in their advisories that the year has kicked off stronger than 2022 finished.

The early 2023 optimism overlooks the forecast headwinds that dominate the headlines.

But there’s an emerging view that the bottom of the market may be here sooner than anticipated.

Open houses have certainly been well attended, with agents advising most buyers have adjusted their purchasing desire based on the need for higher loan repayments.

The BresicWhitney group reported 4457 groups through its listings during January, which was more than in January last year, and 10 times the numbers of last December.

This year has kicked off stronger than 2022 finished. Picture: Julian Andrews.

The Sydney auction clearance rate benchmark is another emerging sign of renewed optimism with the February success rate now in the 60s, up on the 50s in December last year.

Historic PropTrack data reveals even through the disrupted pandemic years February clearance rates always outdid December. This time last year saw auction clearance rates at 69 per cent, which was up on the 60 per cent in December 2021.

BresicWhitney CEO Thomas McGlynn affirms the early signs have been “promising.”

He suggests Sydney has “moved through the worst of any market headwinds” and “many markets are already seeing a more stable environment.”

While interest rates will continue to impact, along with the probable spectre of higher unemployment, the biggest live issue remains supply.

This week Ray White Research calculated the 8000 new Sydney listings sat 42 per cent down on the 14,000 in the three month rolling tally to January last year.

It seems prospective vendors are prepared to wait out the lull in prices.

The scarcity was “doing little to elevate prices at this stage,” Ray White Group’s William Clark advised.

Despite what is actually going on in the marketplace, the forecasts of sizeable price declines by economists for 2023 remain on the table.

The often correct market forecaster Chris Joye from Coolabah Capital affirmed last week that his initial late 2021 forecast of house prices falling by a total of 15 to 25 per cent “is on track.”

This week Cameron Kusher at PropTrack forecast Sydney prices will fall between 8 per cent and 11 per cent this year, tweaking his previous 9 per cent to 12 per cent decline forecast. Both Kusher’s forecasts are up on the actual 7 per cent fall last year.

But there are increasing numbers of smart industry watchers including John McGrath, at McGrath Estate Agents, who think the rate of decline has been slowing and that we are either at or approaching the bottom of the cycle.

The first commentator to make the bottom of the market call came late last year from Stuart Wemyss, the founder of wealth adviser, ProSolution, who forecast “prices will stabilise from here.”