In the last several weeks we have seen a slight easing of the high level of activity in Sydney’s residential property market. The continuation of pent up buyer demand from Q4 2013 has seen Sydney’s market buoyed along til now with sales across the city hotly contested by confident buyers keen to purchase their home or investment.

The auction market has performed consistently year to-date with auction clearance rates hovering around 82.5% on average. This is especially impressive considering there have been a roughly five ‘super Saturdays’ during this period with each having 800+ properties going under the hammer. Over the last couple weeks we have seen this consistently high rate waver with the last two months recording average clearance rates of roughly 75% (for May and June).

While this is far from a significant drop it perhaps suggests that the previously uninhibited buyer fervour is beginning to wane slightly and may be a sign of things to come – particularly during the traditional slower winter months. We are also noting a downturn in buyer numbers at open homes and a higher propensity for agents to sell properties prior to auction.

An indication that this slowdown may be a precursor to price decline can be observed by looking at individual sales and prices. Properties are still routinely exceeding vendor expectations and agent pricing guides. The recent sale of two similar properties demonstrate this; 31 Albion Street, Annandale sold at auction for $890,000 after an initial price guide of $775,000 and 198 Belmont Street, Alexandria too sold at auction for $925,000 with a guide of $700,000.

These sales give a 13.8% and 27.7% variance on the initial price guide respectively. Both these properties are located in desirable inner-city suburbs and certainly demonstrate that, irrespective of wider Sydney market stats, price growth and demand show no signs of subsiding in these specific pockets.

Clearance rates

The above shows that average monthly auction clearance rate has experienced three months of decline. While the vast majority of properties are still selling – and in many cases for exceptionally bullish prices –  it does perhaps suggest that savvy buyers have slightly more room to negotiate than what they may have been accustomed to in the preceding months.

Follow: Subscribe to this post's comments