Sydney’s housing market bust accelerates

CoreLogic’s preliminary auction report suggests Sydney’s housing bust is deepening, with a preliminary clearance rate of just 52.5% recorded across the city over the weekend – the worst auction result since April 2020:

Preliminary auction clearance rates

Sydney continues to lead auction market lower.

Sydney’s poor clearance rate, combined with its high volumes, helped drive the national clearance rate down to just 55.0% – also the lowest result since April 2020.

Auction clearance rates have traditionally been a reliable leading indicator for dwelling value growth in Sydney. Thus, as illustrated in the next chart, the collapse in clearance rates is pointing to accelerating price falls for Sydney:

Sydney auction clearance rates

Sydney dwelling value losses to accelerate.

The quarterly rate of price decline has hit 2.9% in Sydney, which will surely accelerate from here.

Sydney’s weak auction clearance rate suggests home buyer demand has collapsed. This is also confirmed by May quarter’s sales volumes, which were down by one-third across Sydney versus a year ago, and were also running 6.5% below the five year average, according to CoreLogic:

Housing sales

Sydney’s home sales have collapsed.

The way it is going, Sydney will record double-digit price falls in 2022, with more to come next year if the Reserve Bank continues to hike rates aggressively.

Unconventional Economist

Comments

  1. boomengineeringMEMBER

    No extra homes on market here. Will let you know if any noticeable price drops at the auctions of the two freestanders.

      • Charles MartinMEMBER

        hahaha, at the height of the real estate insanity, I actually saw water glimpses in a listing, which still makes me laugh.

  2. Hill Billy 55MEMBER

    It looks as if quite a few Queenslanders have got the message that the cheap thrills from down south (cashed up buyers) will be slowing to a trickle. Expect QLD sales to max out over the next month or so.

    • Housing still seems to be selling for strong prices but clearly not at the price levels of pre Christmas. (Friends sold for mid 2s now lucky to get low 2s on the GC) Inner Brisbane also seems ok but vendor price expectations, particularly for new luxury homes still looks set at January levels and hence those $3m+ homes are sitting unsold on my RE.com watch list.

      Stock on market still will below historical levels so there is no doubt the pricing action would change here if the market was met with a syd/Melbourne increase in available stock!

    • BornwildMEMBER

      Going to Auctions in Brisbane is now my favourite Saturday morning activity. Went again to 3 auctions (Albion and Hamilton) – all passed in. Might have been the weather but unlike a few weeks ago, the numbers at the auctions were very low – maybe 10 or so people at the auction – with only 1 or 2 bidding.
      At one of the properties – the Auctioneer was desperate to get any sort of opening bids. He suggested that there might be have been an offer for 1.1m, so someone then bid 1.11m. After passing in, they are now looking for offers above 1.3m

  3. With many funds soon to update their June quarter performance,, undoubtedly a few will be providing similar growth dynamics to the above housing market, although one can always claim to beat the index.
    With US financial assets primarily held by US households, ( although somewhat unbalanced), and with financial assets as a percentage of household wealth having reached historic highs, will the damage over the coming months in the United States, limit the potential downside in Sydney et al house prices.

  4. Can MB overlap the price gains over the last 2 year with the price drops so far. Eg is it trending the same amount down as it went up?

  5. Seems re.com.au don’t want plebs (or buyers) to see any price drops coming their way
    Looked at local area (sunny coast) last week and they still had the suburb 1yr / 10yr graphs showing price increases (which had flattened out, slight drop) after a circa 35% pa increase.
    Looked again just now, cant get a graph with any recent monthly avg. price changes, only a pa. increase, which i guess will stay positive for a while, until annuals roll over the top.

    • Display NameMEMBER

      You are late to the party if you think the key ponziteers are interested in price discovery. Been buried as deep as possible for years.

      • Indeed! RE.com property price = contact agent, RE.com sold price = contact agent. RE.com rented price = what ever you say it is (When I was renting the rented price was listed as 170pw more than I was paying.)

        There is nothing about those sites that promotes price discovery, we forget that its is RE agents not vendors who are the target market for RE.com

  6. — Perhaps the RBA will hike one or two times but after that the RBA is bound to lower rates (from say August this year) we could have zero interest rates by the end of this year.

  7. Brendan o’connor today announced plans to reboot demand by rebooting mass immigration asap. First step, getting rid of vaccination requirements for people coming to Australia.

    • BradleyMEMBER

      Let’s forget about smallpox etc vaccinations too. Come on down, FMD and Varroa are about to run amok. Who cares if we keep adding another threat to health and well being? Got to keep those borders open.