After a long year, the market seems to be shifting towards favoring homebuyers. Simultaneously, Sydney housing prices are rebounding at the fastest rate since the 1980s, while mortgage costs are soaring at the fastest rate in a generation. This puts homebuyers under the most severe housing affordability pressure in thirty years.
However, the market has begun to show a more balanced situation, with early signs of housing price decline, leading some experts to predict that this trend may continue into the next year, offering a glimmer of hope for Sydney homebuyers.
According to data from Domain, the number of auctioned properties in Sydney hit a new high in November, marking the highest level in 19 months. This has resulted in a clearance rate dropping to 63.7%, the lowest since 2023.
The clearance rate refers to the proportion of homes scheduled for auction that are actually sold; a 60% clearance rate indicates a balanced supply and demand in the market. If the clearance rate is higher than this proportion, it usually indicates rising prices; if lower, it typically suggests prices will fall.
While the clearance rate in the Eastern Suburbs is close to 70%, indicating better performance, other markets have seen a decline. The clearance rates in the Greater Sydney Southwest Outer, Sutherland, Baulkham Hills and Hawkesbury, Central Coast and Outer West, and Blue Mountains areas are all below 60%.
According to SQM Research data, the total inventory of unsold homes in Sydney increased by 0.3% in November, and distressed property listings rose by 4.5%. Louis Christopher, Managing Director of SQM Research, stated that a decrease in the number of homebuyers, coupled with an increase in homes listed for sale, provides more choices and less competition.
He pointed out, "Current interest rate levels have begun to impact current homeowners and hinder potential homebuyers, even causing them to lose eligibility, and the economy is slowing. We predict a mild to moderate decline in Sydney and Melbourne [housing prices in 2024]."
Christopher also noted signs of seller concessions, including increased discounts and distressed sales. He predicts that these figures will continue to rise in 2024. He said, "[The situation] is becoming easier for buyers and more difficult for sellers."
According to CoreLogic's November Home Price Index, the growth rate of Sydney housing prices slowed from 0.7% in October to 0.3%. Eliza Owen, Director of Residential Research at CoreLogic Australia, stated that the slowing growth of Sydney housing prices, coupled with fewer homes sold under the hammer, is making the market more favorable for homebuyers. She also pointed out that the median time on market for property transactions in November was 30 days, up from 28 days in September. She said this is because listing volumes have started to normalize after falling below long-term average levels, making the market more balanced.
Henny Stier, Chief Buyer's Agent at OH Property, stated that many sellers now need to sell due to financial reasons, even if they cannot achieve their dream target price. This presents an opportunity for homebuyers, as they may secure better deal prices from sellers. However, Stier also cautioned homebuyers not to expect a significant drop in prices, as the Sydney housing market remains a tight market, and supply shortages still persist.
