Sydney’s housing market has clearly entered a correction phase, with values falling since February, according to Cotality.
This weekend’s auction results from Cotality confirmed that the correction is deepening, with Sydney’s preliminary auction clearance rate crashing by 6.0% to only 49.2%, “the worst outcome since auction results were heavily disrupted during early COVID in April 2020”:
Source: Cotality
Tarric Brooker, who has been monitoring Sydney’s auction market since 2018, noted on Twitter (X) that this week’s auction results were the worst that he has seen.
Based on his sold-to-listed methodology, which measures the proportion of homes listed for auction this week that were reported as sold by Domain, Sydney reported just 28.0% of successful auctions.
“Sydney [was] absolutely smashed to its lowest result since my records began in 2018 (ex-public holidays and Christmas season)”, Brooker wrote on Twitter (X).
“Sydney saw a quite absurd 44.9% of auctions unreported this week”.
Brooker added that the market will “remain profoundly weak and highly vulnerable to a further reduction in demand stemming from the changes to the federal budget”.
Leading Sydney auctioneer Tom Panos last week described the market as the toughest he’d seen in seven years.
In this week’s market wrap, Panos said that investor demand has largely vanished, along with lower crowd numbers and buyer caution.
On the positive side, now that the federal budget is out of the way, Panos noted that uncertainty has decreased, with both buyers and sellers knowing what they are dealing with regarding tax rules.
Panos also said that the owner-occupier market is showing some strength, with the weakness largely coming from softer investor demand.
Overall, with mortgage rates likely to rise further and investor demand ‘knocked out’ by the changes to negative gearing and capital gains tax, there is more downside to come.
