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One of the more useful insights into the Sydney property market over the past month  was a speech given on 23 April 2013 to the Citibank Property Conference by Luci  Ellis,  the Reserve Bank of Australia's Head of Financial Stability Department.

Aptly titled "Housing and Mortgage Markets: The Long Run, the Short Run and the Uncertainty in Between"  this speech identified two long run core themes very relevant to anyone investing in property in Australia generally and in the two most populous cities of Sydney and Melbourne in particular.

Based on the evidence discussed later in this article, many of its themes resonated with those of us this month bidding  at auctions and negotiating property contracts at the coal face. 

 

If you believe the figures reported by Australian Property Monitors, some very strange animal spirit gripped Sydney property buyers during the pre Easter Super Saturday which this year occurred on 23 March 2013.

Relative to the same event last year which occurred on 31 March 2012, in the $1 million to $2 million bracket in the City and East, Inner West, Lower North Shore, Upper North Shore and South regions of the Sydney residential property market:

• auction volumes that day were up by 31%
• monetary turnover was up by 42% and
• the average price paid increased by 8% to $1,367,901.

 

Sydney's residential property market opened to a chorus of mainstream media reports of auction clearance rates above 70% and the return of boom times even at the top end above $2 million.

Dr Andrew Wilson, Chief Economist at Australian Property Monitors went so far as to proclaim on 24 February 2013  in the Domain Property Guide  published on 24 February 2013 that:

" [t]he share market is certainly at the highest point it’s reached over the past couple of years, and it’s no coincidence that rising activity in equity markets works its way into the prestige property markets which have been dragging the chain over the past few years, there’s a growing feeling of prosperity which might get those change-up buyers up and running. I think the $2 million to $4 million price point will be the most active.’’

 

...how did we fare with our predictions for the 2012 Sydney residential property market over $1 million which, to recap', were:

• "the European sovereign debt crisis will continue to be the most significant influence on buyer sentiment and confidence
• interest rates will continue to fall despite increasing resistance by the four major lenders to pass on cuts in the official cash rate 
• announcements by the NSW State Government later in 2012 regarding heavy and light rail projects will influence prices of properties in close proximity to those projects 

Apart from upbeat mainstream reports of a sustained improvement in auction clearance rates and the Reserve Bank of Australia's decision on 3 October 2012 to reduce the official cash rate by 0.25%, the rest of that month looked and felt perfectly uneventful.

In a continuation of the theme discussed in the last CurtiseCall, our comparison between the performance of the Sydney property market in October 2012 with the same month last year reveals that all was not as it seemed between $1 million and $1.5 million and even more so above $1.5 million.

Undoubtedly turbo charged by a perception that a low interest rate environment is here to stay, Sydney's auction clearance rate on the 22nd of last month rose to 67%. This was its highest level in two years. More alarming was the extent of that jump relative to previous months where the published clearance rates have generally hovered around the low to mid 50% mark.

If proof was required that rather than being a single market, Sydney's so called prestige residential property market  is really a series of sub markets operating in the same geographic area as each other, one need look no further than the activity which occurred last month.

In what may come as a surprise given the down beat impression conveyed by most mainstream commentary, top end buyers buoyed by the absence of headlines sensationalising the European debt crisis and a steadying of the local bourse stormed out of hibernation last month to notch up at least 117 reported and unreported purchases over $1.5 million throughout the Sydney metropolitan area. 

Media reports of rising clearance rates disguised the fact that relative to the same month last year, turnover in Sydney’s property market plummeted this month.

As a comparison between statistics compiled by Australian Property Monitors for each of those months confirms, reported turnover of houses fell by 38% and for units, the reduction was 54%.

A further 0.25% cut in the official cash rate this month and a rebound in US orders for durable goods failed to allay investor concerns about Europe’s continuing debt woes and the impact of the poorly understood carbon tax. As a result, the local share market moved into correction territory at the beginning of the month with investors diverting resources to perceived safe havens such as the US dollar and low yielding Australian Government bonds. If purchase volumes are any guide, so called ‘renovator’s delights’ over $900,000 in Sydney’s residential property market also fell into the safe haven category.

Following the popularity of our CurtiseCall April 2012, this month, we present a similar analysis to last but with a twist – no pun intended. Instead of comparing May 2012 with May 2011, here we compare house sales over $1.5 million in May 2012 to April 2012.

Following the near disappearance of the Euro debt crisis from the headlines and anecdotal evidence of increased activity and auction clearance rates associated with a likely drop in the official cash rate, it seems like an ideal time to assess the impact of the past 12 months of turbulence on the Sydney housing market above $1.5 million by comparing a snap shot of this month’s activity against the same month last year.

Something strange happened this month at the top end of Sydney’s property market in Mosman. Life returned and did it with a vengeance.

According to research carried out by Curtis Associates, there were nine Mosman house sales above $4 million this month which, given the post GFC malaise, was remarkable per se and even more so when it is considered that this turnover was just one sale shy of the number of such sales recorded over the entire five months since 1 October 2011.

If proof were needed that buying property is a risky business, one needs look no further than the first few weeks of activity in the 2012 Sydney property market.

As discussed below, the devil is in the details which in some cases paint a very different picture to the one often conveyed by mainstream media and macro analytical research houses via their weekly reports of stable auction clearance rates, median property prices and regular private treaty deals.

Mainstream commentators this month described Sydney’s property market as having run out of puff despite and as predicted in CurtiseCall’s December 2010 market wrap, cuts in the official interest rate. This conclusion was based largely on so called “plunging” auction clearance rates recorded by Australian Property Monitors during the three Saturdays of this month before Christmas Eve with the following extracts from Dr. Andrew Wilson’s weekly article in the Sydney Morning Herald on 19 December 2011 being typical of such commentary:

• “…buying activity [was] in full retreat over the past month”…
• “…[with] the continued stagnant nature of the prestige property market…the market is being supported by significant numbers of first home home buyers”…
  

In the search for buying opportunities, Curtis Associates, buyers’ agents in Sydney, noticed a trend which began in October 2011 in the number of Sydney residential and commercial and retail properties being advertised for sale by mortgagees, receivers and managers. Such sales are collectively known as “forced sales” and the interesting trends identified during this month in which such sales spiked are the focus of this edition of CurtiseCall. 

Although auction clearance rates in the Sydney property market for October 2011 were broadly in line with previous months this year, there was an unmistakable sense around the auctions and in negotiations that buyers in the $1 million plus bracket were at last beginning to prevail over previously stubborn vendors now prepared to meet the market. 

It is often said in property circles that house prices in Australia double every seven to 10 years. Prompted in part by the fact that September 2011 marks the seventh anniversary of a relatively sharp downward correction in Sydney housing prices following a boom which peaked around 2003, we thought we would test that proposition by analysing all reported September 2011 sales over $1 million of Sydney houses or units purchased in the last 10 years to see what capital gains or losses were made by the vendors of those properties.

For those looking to buy a house in Sydney or an investment property in Sydney, the issue of CSG mining is a further and increasingly high profile example of the regulatory and environmental risks which can be encountered in the Sydney’s ever changing property market.

With a lot happening in the lead up to the imminent launch of the new Curtis Associates web site, this month’s CurtiseCall is a little shorter than usual.

The Sydney property market trends discussed in CurtiseCall June 2011 continued this month.

You did not have to look much further than the June 2011 Sydney real estate market for continuing evidence of a two speed economy right here in our back yard.

This was a month of conflicting economic data.

Towards the end of May 2011, the $2 million to $3 million bracket of the Sydney property market departed from the trends above $2 million discussed in CurtiseCall February 2011.This shift may signal an end to the confidence depleted mood which has in 2011 afflicted many real estate buyers as they responded to daily doses of...

In addition to being at the heart of the newly elected State Government’s election pledges to fix Sydney’s long standing public transportation problems, Sydney’s existing and proposed light rail systems are seen by some watchers of the Sydney property market as one of the biggest potential influences on the future direction of inner city residential and commercial property prices in the medium to longer term.

 

The Sydney property market this month was one interrupted by a change of State Government on 26 March 2011 and influenced by the natural disasters in Queensland and Japan. In a mood reminiscent of the uncertainty induced by the GFC, other buyers were spooked by the nuclear scare following the last of those disasters as well as the political upheavals in North Africa and the Middle East.

 

Despite the re - opening of the Sydney property market this year coinciding with tragic and de-stabilizing natural disasters in Queensland, Victoria and more recently, in New Zealand, some trends are already emerging...

In the last six weeks of the real estate calendar year and with the Federal election finally out of the way, the number of residential properties advertised for sale in the Sydney property market rose to levels unseen since the 2008 global financial crisis. That trend mirrored a sharp spike in the number of off and pre market properties offered to Curtis Associates over the same period especially over $2 million.

While auction clearance rates have definitely fallen this month relative to the levels experienced at the same time last year, the devil is in the detail underlying the published statistics. In an attempt to reconcile mainstream media reports which conflict with its day to day experience in the Sydney property market, Curtis Associates has analysed all reported sales transactions in the $1 million to $2 million bracket for October 2010 in the inner west and the eastern suburbs.

In a study much anticipated by some housing bubble doomsayers but which reinforces the views expressed in CurtiseCall August 2010, preliminary calculations just released by credit agency Fitch Ratings suggest that...

Talk this month of a softening in the Sydney residential property market belies what has been occurring in the auction rooms and elsewhere in the Sydney property market between $1 and $5 million. With spring in the air, continuing low interest rates and near full employment, buyers in that bracket have emerged from a hibernation prolonged by the hung national parliament and school holidays to notch up at least 220 reported sales throughout a large sample of representative suburbs in September 2010.

Driven by cold weather, a never ending Federal election and lingering uncertainty about the global economy, much of the Sydney residential property market has been in a holding pattern for the last six weeks. Media reports of rising auction clearance rates during that period masked a generally low underlying turnover. Even a swag of positive economic data, stable interest rates, the continuing minerals boom and a generally robust profit reporting season failed to entice buyers to take up an ever increasing supply of on and off market properties especially in the $2 million plus bracket.

Regular visitors may recall CurtiseCall - April 2010. As The Age reported today, in a paper reflecting his personal views rather than those of his boss, ASIC’s Chief Economist also thinks...