In the absence of a working crystal ball, it is impossible to truly make predictions about any market – especially one as dynamic as the Sydney residential property market. Notwithstanding, with trends set to continue in their current fashion, IPS sees the onset of the 2014 property market being a continuation of what we’ve been witnessing to-date. That is, in addition to anecdotal evidence, there exist a range of key indicators suggesting the current breakneck-pace of the market is set to continue right up to, and post, the Christmas holiday period. Throughout 2013, we have observed a close correlation between the continuous rate cutting cycle (to now record lows) and home loan approval figures (both investors and owner occupiers) which have been climbing steadily.

Typically, there exists several months lag between increased loan approvals and an associated spike in market activity. With loan approvals continuing to trend upwards, we anticipate a continuation of robust market activity in Q1 and Q2 2014. Pent up demand is likely to be exacerbated by the traditional constriction of stock on market early in the New Year. This situation points toward there being little respite from the fiercely competitive environment in which most buyers have found themselves throughout 2013.

Not exactly the Christmas present buyers were hoping for…

 

approvals growth 2013


With the volume loan approvals continuing to trend upwards since the start of 2013, we anticipate there will continue to be a large pool of prospective buyers looking to purchase from the outset of 2014. (Source: UBS)


 
stock on market Oct 2013`


The amount of stock on market is down compared to Sydney’s long-term average and, with a greater number of buyers, competition for properties can be fierce (Source: SQM Research)

This prediction is unlikely to be greeted enthusiastically by hopeful buyers who are already finding it difficult to obtain value in a heated Sydney market. However, IPS continues to identify value across several price points and in a range of desirable Sydney suburbs. For anyone looking to enter the market at present we highly recommend conducting as much research as possible to establish an idea of value in order to avoid overpaying in heated auction conditions or as a result of being drawn into emotionally draining closed tender / dutch auction negotiation environments with sales agents.

While the search for the ideal property can be stressful and time consuming it is important to remain patient and where appropriate, involve independent professional assistance.

 

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