Agency X finished with a clearance rate of 23% - selling 3 out of 13 auctions.

I get a weekly summary report from an agency in Sydney's Eastern suburbs and this was the headline today.

At first this worried me but then I took a look at some of the houses that didn't sell such as these two :

416/50-58 Macleay Street Potts Point NSW 2011 - Apartment for Sale #125566430 - realestate.com.au --> they want $1.3m and the bedroom doesn't even have a window?

15/13 Oatley Road Paddington NSW 2021 - Apartment for Sale #125630762 - realestate.com.au --> $1.8m for a two bedroom?

It seems maybe the shocking clearance rate is not because Sydney is "crashing" but rather vendor's have totally unrealistic expectations (even by Sydney standards)

 

Don't know the market that well in those areas, but the prices don't seem that far from what you would expect previously in those markets dor that product surely?

In any event what I expect we'll see in regards to clearance rates is the rising/receding tide analogy.
In a hot market, all boats rise starting with quality/value and working its way out.
When it recedes you'll see it work in reverse.

The lower quality properties that have niggly issues that are ignored in a hot market, will be first to be marked down/harder to sell.

 

Pretty much all parts of Sydney are extremely overpriced by any measure. I have researched extensively and there are very very few markets where the prices are even remotely similar for what you get.

 

I think buyer attitudes are starting to shift. They're just not willing to, or cannot get the finance to, pay those increasing prices anymore. Add in mounting oversupply and I think a lot of vendors, especially in Sydney, are going to have to rein in their expectations.

 

1.3 M for an 80 sqm 1 br?

I get it's in a nice spot....but 1.3 Mill? Really?!

 

And it's rental appraisal is $850 p.w?? Are you kidding me. Who in their right mind would pay $850 for 80sqm 1 bedroom apartment.

 

... and low 3.4% rental yield.

if we apply the average Sydney rental yield 3.9% (for apartments), the price should be about 1.1M

 

Yields are expected to be lower at the high end.

 

Interestingly the one in Potts POint sold for $750k in Feb 14 (so they basically want double after 3 years). The one in Paddington sold for $975k in 2002 which seems high (no wonder they want so much...!)

 

I didn't know that... I thought the opposite - high-end attracts more tenants who can pay more.

E.g.
In my area yield is above 4%, each 2br apartment is in 940-960K range, price is higher than avg price of Sydney 2br apartment, but yield is higher than average

 

Went to 5 auctions in a prestigious suburb called Kew on 18 Jun. All passed in.