Rosalie and I started the year looking forward to an exciting time to come and we weren’t disappointed – 2015 turned out to be a year like no other.
We kicked off with higher than normal listings and interest rates tracking in a downward trajectory. Buyer enquiries were at record levels and attendances at open homes sometimes resembled a scramble for the bus to the beach on a hot day. The Inner West auction clearance rate for January 30 was an extraordinary 69% and this rate was exceeded as early as February 7 with a clearance rate of 82%! *
These figures set the scene for one of the greatest selling markets the Inner West has seen. Records were smashed. It was a perfect storm of low interest rates and increased demand from home buyers and investors that kept auction clearance rates at record levels.
Rosalie and I saw first-hand what the media was reporting: frustrated home buyers at auctions where the bidding commenced above their budgets. One memorable example was the auction for 44 Margaret Street, Petersham. A completely un-renovated home attracted a crowd of over a hundred people, with 27 registered bidders. The opening bid was $900,000, (which was the reserve price) and after a frantic auction the home sold for $1,204 million.
Winter is traditionally a slow time in the market but listings remained high as people thought to take advantage of the price frenzy. The first cracks appeared when vendors with ever increasing expectations stretched auctioneers’ powers of persuasion to their limits. Homes that until recently were crossing the finish line like an Olympic athlete began to resemble a breathless old man who was late for the bus.
Investors evaporate, home buyers freeze
Westpac’s decision in October to raise the variable interest by .2% was a shot across the bow, quickly followed by other major banks, sending the market into a tailspin.
Clearance rates dropped to their lowest levels since 2012, hitting 62%. ** Rosalie and I believe this figure is inflated by about 10% with many agents “too busy with post auction negotiations” to post failed auction results.
There is still a lot of stock out there on the market which needs to be reduced in price or withdrawn.
Our advice – delay listing property until mid-January 2016.
The market has had a reality check and vendors will come to understand that it’s not just their property that has had a value adjustment.
At Homes Inner West we feel confident that the Inner West market will strengthen – not to the dizzying figures of the first half of 2015 but a stronger, steadier return to normal levels.
Now this year draws to a close and once again we’re looking forward to the New Year – with plenty of Champagne “bubbles”!
So from Rosalie and myself at Homes Inner West and Planet Properties, best wishes for a very happy holiday season.
Rosalie and I are always on the look-out for ways to help people make a property choice that is right for them and we are recognised as the experts in the Inner West’s real estate market.
If you have something you would like to ask, just leave a comment, or give us a call.
Like to know more?
* Source: Jonathan Chancellor Property Observer (www.propertyobserver.com.au)
** Source: Sydney Morning Herald