This is our final edition for 2013, and, to say it has been an interesting year would be an understatement! A big thanks to those who’ve joined our community and, hopefully, we’re all a little better informed about our marketplace.
 
As we’re in the final run to Christmas and NYE, it’s a time of year for both reflection and looking ahead. With that said, following is our 2013 market review and a prognostication for Q1 and 2, 2014.
 
At the beginning of 2013 Intelligent Property Services predicted modest, yet worthwhile, growth for the Sydney real estate market. That said, IPS has joined the queue of the many market commentators who have put up their hands to admit they underestimated the rapid market turn-around and the ensuing buying frenzy, resulting in some of the biggest price gains and highest level of auction clearance rates in recent memory.
 
Too many buyers, too few homes…

From May onwards, the Sydney market awoke from its slumber, roared back to life and rekindled its citywide love affair with investors and homebuyers alike – all of whom flocked back to the market, spurred by low interest rates and a renewed optimism for property’s long-term growth and its perception as a safe investment. With flat growth over most of 2011 and 2012 affordability increased and good rental growth created increasingly attractive yields to would-be investors. 20/20 hindsight clearly identifies these indicators as the catalyst for the market rebound.
 
The significant number of cashed up, hopeful buyers was again compounded with a lower than average level of properties for sale; forcing even greater completion. The below graph shows a dramatic increase in loan approvals which directly correlates to the flood of buyers who have entered the market.
 

20131220_HousingLoans

With the volume of loan approvals soaring throughout the year (and continuing to do so) it is possible to see the volume of active buyers in the market place looking to purchase property. (Source: UBS)

While Sydney has been the obvious standout performer in the national housing market, with an impressive +11% for the year, the wider Australian market has also been tracking well. The national median house price has grown 5% for the year with notable rises in Perth (8%), Melbourne and Darwin (both 7%). Canberra is the only capital that is set to experience price falls in 2013 (down 2%). Of notable mention is also Brisbane, which looks to have finally shrugged of its three-year slump, with dwelling prices up 3% for the year.
 

20131220_MedianPrices_Sydney

With historically low interest rates, a high number of buyers and lower than average number of properties for sale it is unsurprising that median prices are trending steadily upwards in Sydney.


 
20131220_ClearanceRates

The monthly average clearance rate has been extremely high in the second half of 2013, coming off the boil slightly towards Christmas.


 

First home buyers – a threatened species?

With the flood of investors and upgrader pounding the pavement week in, week out, there has been a worrying lack of first home buyers in the Sydney market. While some critics believe first home buyers are too ambitious in both their suburbs and assets of choice, the fact remains that affordability is a serious issue for young buyers looking to get started in the Sydney market.

 

20131220_HousingApprovals

While the volume of approved loans to investors and existing owners is significantly up, the number of loans to first home buyers is in decline.


 

Where to from here?

As 2013 draws to a close, we have noticed that the volume of advertised properties is slightly higher than previous months and, in turn with fewer buyers this time of year, some of the heat has dissipated from the local market resulting in some unexpected bargains for buyers. We expect this trend to carry through to the first few weeks of 2014 as, traditionally, people kick off the New Year with a healthy spending hangover and will likely approach the market, initially, with somewhat tempered enthusiasm. We anticipate this to quickly change with the autumn selling season set to be every bit as active as spring 2013. Stay tuned for our full 2014 prediction in January!
 
From the team at IPS, we hope you have a safe and relaxing holiday season and a great start to 2014!
 

Follow: Subscribe to this post's comments