More than one-third of Sydney homes sold before auction last month as eagerness from sellers and buyers to seal a deal continues to mount ahead of economic uncertainty facing the property market.
New figures reveal that 33.5 per cent of Sydney homes sold before auction last month, up from 24.8 per cent in February last year.
Fierce buyer competition for the limited amount of homes on the market continues to raise the city’s property prices to near-2017 peak levels.
Domain senior analyst Nicola Powell said several factors were fuelling the rise of properties selling before auction.
“There will be some buyers putting in some robust pre-auction offers to secure the property before it goes to auction to avoid that competitive auction market,” Dr Powell said.
“From a vendor’s perspective, it wasn’t long ago that clearance rates were near historic lows and that’s a recent memory … for some it will be an element of relief.”
The global spread of coronavirus has raised fears for the health of the Australian economy as the Prime Minister Scott Morrison announced on Thursday a multibillion-dollar stimulus package to prevent a recession.
The virus has also affected the local sharemarket, which had some of the biggest losses this week since the global financial crisis in 2008, and which could fuel even more interest from buyers and sellers alike in coming weeks, according to Dr Powell.
“The uncertainty with the sharemarket will make bricks and mortar attractive as an investment,” she said. “This is uncharted territory, we don’t know what the impacts will be on the housing market.”
Scheduled auctions on Saturday March 14
NUMBER OF AUCTIONS | |
Central Coast | 8 |
City and east | 83 |
Inner-west | 101 |
Lower north shore | 77 |
North-west | 70 |
South | 63 |
South-west | 50 |
Upper north shore | 46 |
West | 32 |
CommSec chief economist Craig James said the major driver for the housing market’s strength was low-interest rates and the restricted number of homes on the market rather than coronavirus fears.
“There’s a limited supply on the market and strong demand and that is putting upward pressure on prices. It’s created this FOMO if home prices rise significantly again they may have to wait until the next downturn,” Mr James said.
Ray White Touma Group principal and selling agent Charles Touma said buyers were eager to buy before auction to avoid competition and missing out.
“It’s obviously driven by FOMO … the other reason is there is really low stock. [Buyers say] ‘I don’t want to wait three weeks to find out that I’ve missed this other opportunity’.”
He said sellers were equally eager to accept offers prior to secure a buyer in uncertain times.
“A bird in the hand is worth two in the bush … the security of a deal is sometimes more important than the unknown. If you’ve got an unconditional $2 million offer, would you take that or gamble to get $2.1 million,” Mr Touma said.
“There’s no secret we’re going to hit some turbulence and some headwinds. Some sellers are saying if there’s an offer now then they’re happy to take it.”
It was relief for Geoff Glicksman and Matt Osborne, who sold their renovated Wollstonecraft apartment a fortnight before their scheduled auction date.
“The reason we did it as quickly as we did is we knew it was coming up to Easter, the coronavirus stuff was becoming more and more prominent in the news,” Mr Glicksman said.
The couple also recently bought a property in Milsons Point and wanted to avoid any overlap between the two settlement periods.
“We had hoped from the beginning that if we could go prior to auction, we would. We’re very relieved,” Mr Glicksman said.
Di Jones Lower North Shore selling agent Nigel Mukhi said buyers were feeling the heat in the market.
“When it’s a seller’s market you generally see buyers being a bit more pushy,” Mr Muhki said.
There are 634 scheduled auctions in Sydney on Saturday with more than 100 in the inner-west. The lower north shore has 77 scheduled auctions, while the north-west has 70, but the biggest auction day in almost two years will be later this month, with 940 scheduled for March 28. The last super Saturday was in March 2017 with 1104 scheduled auctions.
LJ Hooker Newtown selling agent Edward Burns tips most properties to go to auction as sellers test their luck.
“There is a huge demand and a lot less supply … what that’s translating to is super competitive bidding at auction,” he said. “Turnover is much higher.”
article by domain.com.au