Su-Lin Tan| Australian Financial Review| 8 July 2019
The housing recovery is slowly creeping into the outer suburbs of Sydney and Melbourne as confidence returns, but a boom-time price rise is not likely, real estate agents say.
The weekend saw a strong leap in preliminary auction clearance rates for big auction markets Sydney and Melbourne in the 70 per cent range, with Sydney the standout at 78.2 per cent, according to Corelogic.
The Sydney result in particular sent a strong recovery signal, mainly for popular inner city suburbs which usually trade on auctions. The signs of a recovery were also strong in Sydney’s west, which tend to sell through private treaty sales.
Private treaty sales, not auctions, dominate sales nationally, comprising 80 per cent of sales transactions. So when auctions and privates sales are both strong, housing markets are buoyant across the board.
The Avenue Real Estate Agency’s Steven Liu, who sells in Sydney’s outer north-western suburb of Kellyville and the greater Hills area about 30 to 40 kilometres north-west of Sydney’s CBD, said the market was “going well”. He had 34 groups inspecting a house he was showing on the weekend, a number more likely to have been seen two to three years ago.
“Since the two interest rate cuts, people have gotten more confident and are willing to spend money,” he said.
“It has given the Hills area a boost … but prices will not be at peak time numbers. We see stable prices going up slowly.”
Sellers had high expectations for a four-bedroom house at Jackson Place in Kellyville that Mr Liu was selling two weeks ago, but eight registered bidders got the deal to where the seller was willing to sell at $1.185 million. There has also been an increase in private sale inquiries.
Realestate.com.au data shows that nine homes in Kellyville sold last week, with three sold at auction and the rest sold privately.
Private and auction sales in the western suburb of Merrylands were also going well, but not for apartments, LJ Hooker’s Peter Tannous said.
Buyers across the board were still bargain hunting while sellers had been unrealistically asking for a 10 per cent increase in asking prices, he said.
He had an offer on a duplex at $770,000 and the seller wanted $850,000. He got a vendor $690,000 for an apartment at Charlotte Street after they asked for $750,000. As long as prices were met, deals were being cut, he said.
“I have sold more in the last two months than I did in the four months leading to the federal election,” Mr Tannous said.
“But prices are not rebounding quickly, with buyers still on ‘older’ downturn prices. Things could pick up by spring and into Christmas.”
However the boom of 2012- 2017 was unlikely to be replicated, he said.
“What that period didn’t have was a royal commission ,” he said.
The clampdown on lending volumes and standards meant credit would not be as easily available this time, particularly in aspirational suburbs outside of the centre of Sydney, he added.
In Melbourne too, auctions may be going well for the northern suburbs of Glenroy, Tullamarine and Broadmeadows but private sales are still slow, Ray White’s Ziya Koksal said.
Overall, while auction numbers are strong, private sale numbers are still very weak, with average days on market for Sydney now ballooned to 90 days from 60 days a year ago, according to Domain. The same is happening in Melbourne.
Price discounting – final sale price against asking price – is now at between 8 to 9 per cent for both cities. A year ago it was just over 6 per cent and in boom times, discounting ticks just over 5 per cent.