Over the last month, the Sydney market has continued to gain momentum. Auction clearance rates are at the highest levels since 2015 and stock levels remain about 15% below the same levels as last year.
Sydney prices are now at the same levels in mid-2017 when the market was at its peak. The 3% erosion in values as a result of Covid-19 has now been erased.
A recent auction result at 8 Bishops Avenue, Randwick, just south of the Sydney CBD, reflected a sale price of $7,300,000, well above the Reserve Price of $6,000,000. The opening bid was $5,900,000.
Even in the Western Suburbs of Sydney aggressive prices are being paid. A property at 30-31 Belleview Avenue, Mount Vernon (40kms west of the Sydney CBD) sold for $5,000,000 at $1,000,000 over the reserve price.
In the Eastern Suburbs of Sydney a property 137 Victoria Road, Bellevue is on the market with expectations of over $10,000,000. Despite the two-storey house with distant water glimpses on its 961m2 block being quite liveable, most potential buyers have indicated their desire to demolish and rebuild.
The question on most people’s lips, is: How long will the Federal Government/ Reserve Bank allow the market to run rampant?
Whilst a booming market reflects confidence and a flow on effect in the broader economy, a degree of caution is also required.
Interest rates have never been this low, and as a result, purchasing power is driving what buyers are prepared to pay. Whilst interest rates are as low as 1.99% fixed for 4 years, most loans are for 25-30 years. The elephant in room that few wish to discuss is the possibility of rising interest rates. When rates are at the bottom of the market and have been low for a while now, there is only one way for them to move.
For now, the market is reinventing itself every few weeks and requires constant attention. 2 townhouses at Marsfield in Sydney’s Northern District typify this movement. One property was passed in at auction for $942,000 after very competitive bidding and a 40-minute-long auction. 2 weeks later it was sold for $1,000,000. The other townhouse had the auction cancelled due to a lack of interest and a single offer of $900,000 rejected, 2 weeks after the aborted auction, it sold for $960,000.