- Deteriorating Auction Performance: Sydney’s housing market is experiencing a significant downturn, marked by consecutive weeks of low auction clearance rates.
- Correlation with Falling House Prices: The decline in auction clearance rates is a strong indicator of weakening house prices in Sydney.
- Rising Property Listings: An increase in properties listed for sale is contributing to the downward pressure on both auction clearance rates and house values.
- Interest Rate Hikes and Affordability: The Reserve Bank of Australia’s interest rate hikes have negatively impacted affordability, further dampening buyer demand.
Key Facts and Insights:
- Auction Clearance Rates:”Sydney’s final clearance rate was 58.2% last weekend, down from the 59.0% recorded prior week.”
- This marks “its sixth consecutive weekly result below 60%.”
- A year ago, the clearance rate was significantly higher at 62.5%.
- Correlation with House Prices:”There is a strong correlation between the decline in the auction clearance rate and house price weakness.”
- CoreLogic data confirms that “Sydney values are trending down on a rolling 28-day basis.”
- Rising Property Listings:Sydney is experiencing the “most significant rise in listings in Australia.”
- Price Forecasts:SQM Research predicts a decline of “-1% to -5% decline in Sydney dwelling prices in 2025.”
- Interest Rate Impact:The author argues, “Realistically, values will continue falling until the Reserve Bank of Australia cuts interest rates.”
- Market expectations suggest the first rate cut will occur in Q2 2025, but the author predicts it could be as early as February 2025.
Quotes:
- “Sydney’s housing market is in a slump as 2024 draws to a close, with auction clearances and values declining simultaneously.”
- “One key factor weighing on Sydney auction clearance rates and values is the increase in properties listed for sale.”
- “Realistically, values will continue falling until the Reserve Bank of Australia cuts interest rates.”
Conclusion:
The Sydney housing market is facing significant headwinds, characterized by declining auction clearance rates, falling house prices, and a surge in property listings. The impact of interest rate hikes on affordability is a key driver of this downturn. Until the Reserve Bank of Australia begins to cut interest rates, the outlook for the Sydney housing market remains bearish.