NSW Sydney entering positive territory

Hmm prelim clearance results aren't a million miles away from final clearance results, using CoreLogic info who collect on average 90% of auction results and report 1 week later.

Last weeks prelim 57% got revised to to ~54% the following week once all the data flows through.
This weeks 61% will likely get revised to around ~56-59%.
Compare this to December last year, where prelim clearance was mid 40's and final clearance rates were around 40%.

The trend is overwhelming & clear. Data may not be perfect, but it tells a very clear story about the direction of auction clearance rates. Its a very sharp increase from 40% to mid/high 50's & so far, rising every week. Charting this week on week will show a sharp change in direction.

The explanation can either be:
- February seasonal activity & sugar spike. This is perfectly justifiable explanation given YoY figures and standard Feb behaviour. It makes a lot of sense.
OR
- The market has changed direction and prices are no longer falling.

I think its the latter, but the lag data (price data) indicators will confirm this in a couple of months.

I'm supporting the above auction clearance data with credit information. Credit growth is back (IMO, data to prove this), credit flows are simpler & faster, IO loan adjustment has fully worked through the system, IO pricing is cheaper & the RC is over. Anecdotally we halved our marketing budget, but more than doubled our enquiries and settlements QoQ. Plenty of Sydney brokers are reporting the same. Admittedly this isn't too difficult, Q42018 would've been the toughest finance figures in like a decade (demand dropped off a cliff). Now there appears to be genuine urgency again from buyers too. The speed of which this has reversed has surprised me a bit, but a strong economy allows that. There's plenty of buyers (because of a rampant economy and near zero unemployment) and they're now coming back in.

I'm not saying Sydney is the best place to invest and rush in, all i'm suggesting is the current price cycle of falling prices...is now over (at a macro level). I thought it a few weeks ago based on sentiment, but now all lead data indicators are starting to tell the same story. Lag indicators (prices) will take a few months to reflect this and are telling Q42018 story now.

 

But that property is now under offer

 

I have absolutely every intension of waiting

 

For an IP, maybe.

For a PPOR, I'd be looking now. In fact, I would have started months ago.

 

I got below result in email by the agent. I don’t know about many areas but big dollar paying buyers are back in Cherrybrook/West Pennant Hills.

12 Toorak Court, Cherrybrook, NSW 2126

For a property right next to a busy new line road, this price is ridiculously high even from 2017 peak standards but apparently property had quite a few competing offers. A couple more sales like this and buyer expectation will change from bargain hunting mode to ‘fear of missing out’ mode.

 

Ok, lets see what happens in 6 -12 months time.

I am not feeling the love in Oz markets

Its dangerous waters atm

Labour?
Economy?
Credit squeeze?

That’s 3 items unknowns that are currently going to or will dictate the playing field moving forward

Not prepared to risk my capital guessing what may happen when we are trending south and market sentiment is negative

Market sentiment is item 4 and huge as fear sets in people sit on their hands.....

 

At this stage I am with Louis Christopher until we have further indication.

Its hard to compare the premliminary clearance rate this week with last week, because the % of unreported auctions jumped considerably from last week.

Which usually means a higher than normal revision down when we get the revised clearance rate in a weak market.

Need to wait and compare the revised clearance rate.

One positive sign is that the clearance rate doesn't appear to have crashed under the initial increase of higer volume.

I would say 40's clearance rates are pretty dire, but you could still see falling prices upto the low 60's depending on the conditions.

 

+1

I was lucky to offload an investment apartment in April 2018 at peak prices and settle on a PPOR in June 2018 from a desperate seller at around $250k discount from peak prices. I came out over $300k better off in the end just because of timing (mainly just luck and ability to take action). Last 6 months may have eroded some of the value but prices are now returning to peak levels in the area.

 

..... and this is why the markets have softened, credit squeeze. APRA worked

Until we see the credit ease the market will remain flat or fall. If you cant source finance you cant buy

 

What a pathetic effort to talk up a clearly falling market. What is happening now in Sydney is typical of a bull trap.

 

@Redom is one of the more intelligent posters. Likely has forgotten more than some know.

One can see some one like your self being a pathetic pessimistic key board warrior but than I don't know you. Read Redoms posts get to know who you are talking to.

 

Good work

 

@Redom from memory has a background as an economist ( federal government dept from memory ). Met and spoken with him a number of times. Always balanced in what he posts and those posts come with experience from analysing economic data.

 

There is average 8% increase in clearance every Feb. Comparing Feb to Dec as evidence of recovery is disingenuous.

Why not compare Feb this year to Feb last year? Miles below.

Anything under 60 is associated with price falls. Plenty of falls to come. Fact is, many have been talking it up all the way down. And here we are at -13% and counting. -1.4 so far this month indicating no slow down in price declines.

 

Those statistics don’t tell the full story though. Overall it might be showing a decline because some areas got hammered but there are areas that have bottomed out or rising now a little. Around the corner from us a property sold for 1.92mil middle of last year, it just sold again for 1.95mil. Sure the person who bought it mid last year lost out after transaction costs buts that is still an increase.

Definitely no boom around the corner but it’s not dooms day playing out either.

 

One home sale is meaningless anecdotal. The topic of this thread is Sydney. Which is overall losing value at an increasing rate, period.

 

Untrue - same week last year had approaximately same clearance rate for Sydney but a lot more auctions listed.

Same week last year didn’t have a significant December- Feb jump like this year did.

Same week last year also happened to occur before panic credit tightening and Royal Commission scare.

For some reason, Sydney prices have massive emotional effect on people. For some they have invested most of their life savings in Sydney and others had to move interstate due to high prices in Sydney so extremely polarized positions on Sydney home prices are expected but they should be tolerated.

 

Compare final clearance results there, matey. Not prelim with final. 50's vs 60's

As i said. Sydney down 1.4 for the month so far, will hit 1.5+ easy. That is on data that is revised daily, so not outdated.

 

I urge you to check Corelogic back series file and even including apartments Sydney decline has flatlined post Royal Commission.

 

Ok, boss.