• Home
  • About
    • Buyers Agent
    • Our Company
    • How We Are Different
    • Our Team
  • Who We Help
  • Experience
    • Past Purchases
    • Testimonials
  • Services
  • Resources
    • FAQ
    • Getting a Loan
    • Assistance for First Home Buyers
    • Selling Advice
    • Australian Foreign Investment Policy
    • Calculators
    • Links
  • News
    • Media Mentions
    • Facebook
  • Careers
  • Contact
OH Property Group
Call us  +61 2 8901 4818
  • Facebook
  • Twitter
  • Instagram

Home  /  Blog  /  State of Play

State of Play

July 9, 2010 / General Observations, Market Trend

We’ve seen a marked shift in the residential property market over the last 6 weeks. The exuberance and excitement that we saw in the year leading up to May 2010 has definitely faded. Sydney auction clearance rates hit 80% in May and by June, many Sydney suburbs had seen 15-20% gains since August 2009. In June however, clearance rates have dropped to around 60% and attendance at Opens and Auctions has diminished significantly. The hyper competitive ‘buy at all cost’ mentality is long gone and buyers are much more discerning with what they buy and how much they pay.

So what is happening? A good thing if you ask me! The scales are being tipped away from vendors and it’s becoming more of a buyer’s market. That’s because there are less buyers out there relative to sellers. And why is that?

  1.   RBA has raised the cash rates 6 times for a total of 1.5% since October 2009 leaving it at 4.5% today. This puts a variable rate mortgage just below 7%. For a $500,000 mortgage the cost has increased by $7,500 in just 9 months! And, while this has subdued a bit in the last few weeks, there has been much talk of another 1.5% in cash rate rises within the next year. Understandably, that has cautioned prospective buyers.
  2.   Continued global economic uncertainty with talk of double-dip recession has spooked equity and property investors alike. While property remains a ‘flight to quality’ play, investors have concerns that property price increases have exceeded what is justified by the global recovery. We feel that this ‘pause’ in equity and property markets alike is important and necessary so that we might avoid future bubbles.
  3.  While investors have come in to partially replace first homebuyers as the First Home Owner Boost has been phased out, we have seen lowered demand in the lower end price ranges (below $1 million) which was extremely competitive at the end of 2009 and in early 2010.
  4.  Once again the restrictions on foreign property investors have been tightened to pre-GFC norms. Students and other temporary residents must now again sell any owned property once they leave Australia. Also, any land owned by foreigners must be developed within specified timeframes.
  5.   Investors have been discouraged by the new NSW Tenancies Act, passed in Parliament last month. The Act, while not yet in effect, will tip the scales in favour of tenants, increasing costs and risk to the property owners.

Nevertheless, we view the above as temporary and necessary for the evolution of the property market going forward.

While everyone enjoys a gain of 20%, this cannot be sustainable in the long run and we do need to revert to 8-12% year-on-year gains over the medium to long run. Overexuberance just leads to bubbles that burst spectacularly later on. Australian property prices will always be capped by the affordability factor (so long as foreign property investors are held on the sidelines by foreign investment controls) so property prices roughly need to track wage growth over the longer run.

What this means is that properties are on the market for longer and fewer parties are bidding on the same property. Under Auction conditions, if there are many registered bidders, buyer strategy can only sway the price so much. However, with vendors now seeing poor turnout at Auctions and many failed Auction attempts, buyers can use this to their advantage to negotiate smartly pre or post a failed Auction. We are now again seeing many situations where the first ‘fair’ offer is accepted by nervous sellers. A smart buyer can purchase very well in the current market.

So the capital gains may not match last year’s and we may see a quarter of below average property price returns (but not negative). However, we see no fundamental shift, just a much needed pause. Property prices should continue their inevitable upward climb, just a little slower than in the last 9 months.

About Oliver Stier

Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation.

  • Mail
  • |
  • Twitter
  • |
  • Facebook

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Categories

  • General Observations
  • Market Trend
  • Postings Elsewhere
  • Useful Tips
  • Advice to Sellers
  • Auction Action
  • Featured

Put Yourself Ahead

We give you the edge to buy the right property quickly and intelligently. What are you looking for?

Complete our Property Brief

Past Purchases

  • View Property
  • View Property
  • View Property
  • View Property
  • View Property
  • View Property

Newsletter

Subscribe to our Newsletter using the form below.

Sending

In the Media

Making money from flipping property (Part 2)

Published in Geared for Growth on October 10, 2022

Read More

Latest from Facebook

  • OH Property Group - Buyers' Agents
    OH Property Group - Buyers' Agents
    Photos from OH Property Group - Buyers' Agents's post HAPPY 2023!
    It might only be the 12th of January and people are still on holiday-mode. But our team has done 3 settlements already in 2023! Including our clients who are moving into this immaculate h ...
  • Read More

    What Our Clients Say

    • Henny and Oliver moved quickly to help us to secure the property at a great price. This was before the house has even been listed for sale. I have no doubt that it would have sold for a much higher price had it been put on the market.

      E. Yeo

      Read More
    • They proved themselves spot on with their estimates of the expected sales prices of properties we viewed.

      C. Chu & A. Siu

      Read More
    • Oliver is a person with high integrity who always has the client’s best interest as a priority.

      C. de Salazar & J. Martin

      Read More
    • Your knowledge and expertise in what you do is incredible and the enthusiasm in which you put into your work is so evident in everything you do.

      T. & S. Tifa

      Read More
    • We felt like we were on the winning team from the time we called them. I just wish we had done it earlier!

      N. & J. Murray

      Read More
    • It was like watching a chess game unfold and Henny was able to think several steps ahead and take control of the negotiation process. It was nice to be in the driver’s seat for a change.

      R. & S. Chappell

      Read More
    • Having a buyers’ agent represent us at auctions helped relieve a lot of our stress. It was great to finally have an upper hand at an auction situation for we had the best people working for us.

      M. & M. Ng

      Read More
    • The property we ended up buying had 17 contracts out on the first open house inspection. Henny knew how to get us to the finish line by positioning us correctly and having an open communication with the real estate agent.

      Y. Cho & D. Wong

      Read More
    • We have bought three other properties on our own before. However, compared to our past purchase experiences, this time it was so much easier.

      A. & B. Sengphachan

      Read More
    • We were advised to let the Auction for our new house pass-in and in the end, we acquired the property for $165,000 below the Vendor’s Bid at auction. This savings means the Buyers’ Agent fees essentially paid for themselves multiple times over.

      S. Lam

      Read More
    • In an industry rife with ethically challenged real estate agents it has been a real relief to have a buyer’s agent who possesses such a strong sense of ethics.

      D. Stewart

      Read More
    • OH Property Group was proactive, efficient, and always available during each step of the buying process. During our search we never felt rushed in making any irrational decisions and were able to digest all information in our own time.

      S. & R. Reyes

      Read More
    • Oliver was thorough, considered, and he took time to understand our situation and tailored his approach accordingly.

      C. Tollemache & P. Anderson

      Read More
    • OH Property Group’s professionalism and tireless work ethic achieved the impossible in an impossible time frame. Without their help, I wouldn’t have even looked at the property I ended up buying.

      P. Christensen

      Read More
    • We were very impressed by their dedication, excellent service and attention to detail. Their expertise and advice are invaluable and gave us great comfort to know that one of our biggest financial purchases was a sensible one.

      J. & A. Surjadi

      Read More
    • Watching Oliver strategize throughout the process was like watching a beautiful piece of art – he made so many moves which ultimately resulted in significant savings for us, not to mention a very smooth and relaxed process.

      J. & C. Budge

      Read More
    • To think that we could have bought an ill fitting house for too much money and with possible regret, it’s really made us feel relieved that we have used your services to find the perfect house for us and at good value too.

      O. & C. Valentine

      Read More
    • Without their help it is unlikely that we would have even inspected the apartment we bought, and not only does it meet all our needs but the purchase price was at the lower end of our budget.

      D. & W. Watson

      Read More
    • We are truly happy with our new home. We were able to get a better price than if we had acted alone. OH Property Group’s professionalism and experienced negotiation tactics really landed us with the best outcome.

      J. & V. Wu

      Read More
    • More than making sure we were paying a fair price, Henny and Oliver asked us the right questions to understand what we valued in a property as a couple. They also took into consideration the stage of life we are in and our plans for the future.

      H. Ma & S. Wu

      Read More
    • We found the experience of using a buyers’ agent to be very liberating. It took a load off our minds. It was definitely money well spent and we would definitely recommend your services to others!

      P. & A. Wong

      Read More
    • It was a big weight off our shoulders to know that an experienced agent was bidding on our behalf at the auction which minimised the stress of the day. We feel very satisfied that we have made a good investment in a great area.

      S. & T. Seton

      Read More
    • Our Buyers’ Agent took away all the guesswork, did all the investigation and due diligence and presented us with everything we needed to know in order to make a well informed decision.

      E. Huang

      Read More
    • Oliver represented us at the Auction, let it pass in and then negotiated a price much lower than what we had been willing to pay.

      J. Chang & L. Truong

      Read More
    • I feel that Oliver and Henny were completely honest and open, working with only my best interests at hand.

      J. Mak

      Read More
    • The negotiation process was handled in a highly skilled, efficient and impressive manner and the property secured at the right price within a matter of days despite the competition.

      T. & D. Colwell

      Read More
    • From the moment we started working with Henny, her dedication to her clients became clear. We always found her to be incredibly insightful, thorough and trustworthy. In all things, she truly went above and beyond for us.

      J. & A. Pearce

      Read More
    • You reacted quickly at any time of the day to my requests for further information and appraisal and I believe that you understood my needs and could be trusted to provide reliable information.

      J. Gulley

      Read More
    • Our Buyers Agents were able to provide important advice about the manner in which we should communicate with the Vendor in order to make an offer on the property clearly and confidently – despite our offering well below the asking price.

      A. McConnachie & S. Wrangham

      Read More
    • Once the search started, we were really impressed by the frequency and quality of the communication, as well as the responsiveness to any questions we had.

      J. Tyler & L. Morphett

      Read More
    • About
      • Buyers Agent
      • Our Company
      • How We Are Different
      • Our Team
      • Best Practice Guidelines
    • Who We Help
      • Experience
      • Past Purchases
      • Testimonials
    • Services
      • Property Management
    • Resources
      • FAQ
      • Getting a Loan
      • Assistance for First Home Buyers
      • Selling Advice
      • Australian Foreign Investment Policy
      • Calculators
      • Links
      • Service Providers (Password Required)
    • News
      • Media Mentions
      • Facebook
    • Careers
    • Contact
      • Property Brief
      • Login

    PO Box 274
    Chatswood, NSW 2057

    • Follow @ohproperty