According to CoreLogic’s daily index, quarterly dwelling value growth across both Sydney (-0.4%) and Melbourne (-0.1%) has turned negative, as illustrated in the next chart:
This has prompted a sharp increase in vendors attempting to sell their homes before prices fall further.
As shown in the next chart from CoreLogic, the total number of homes for sale across Sydney and Melbourne rose by 10% and 5% respectively in the year to March 2022 at the same time as total listings nationally fell by 11.0%:
Auction volumes across both markets have also surged. In the weekend before Easter, both Sydney (1,490) and Melbourne (1,795) hosted their busiest auction activity of the year with both markets’ final clearance rates also falling to their lowest levels of the year:
The Easter long weekend was also the busiest on record, led by Sydney where 483 homes went under the hammer.
SQM Research Managing Director, Louis Christopher, summed up the situation nicely:
“Vendors are racing to sell to make the most of the current strong prices and before the market softened further”.
“Sellers now understand that this is probably as good as it gets when it comes to selling, with the federal election and rate hikes looming, buyers are likely to stay on the sidelines.”
Domain’s chief of research and economics Nicola Powell agrees:
“People are cashing in now while conditions are still good, but we are going to see weakening in Sydney and Melbourne.
“We’re likely to see prices fall 5 per cent or even 10 per cent by the end of the year, but that depends on how hard interest rates are hiked by the Reserve Bank.”
As does CBA’s head of Australian economics, Gareth Aird:
“Sellers would be aware we’re on the cusp of a rate hike cycle. I would imagine people would like to sell their properties before rates start going up because there will be buyers out there who expect prices to be lower, and they would like to be ahead of that before it happens”.
Given Sydney and Melbourne are the most expensive capital cities in the nation, they will be more sensitive to interest rate hikes and are facing the sharpest price falls.
Therefore, vendors are wise to sell while the going is still good, and before ‘panic selling’ potentially engulfs the market.