Wednesday, 25 April 2018

Not a single region in Sydney has been immune to the effects of recent tightened lending restrictions and a record increase in housing supply.

Auction coverage Lilyfield NSW

The Sydney suburbs where auction clearance rates have dropped in 2018

Not a single region in Sydney has been immune to the effects of recent tightened lending restrictions and a record increase in housing supply.

Some homeowners who last year could have sold anything with a roof over it, are now struggling to sell homes even in highly sought-after locations around the city.

Since February this year, auction clearance rates in Sydney have fluctuated between about 51 to 63 per cent, but some sellers in pockets of Sydney have felt the effects more acutely.

Hornsby homeowners Holly and Alex Peasland, pictured with two of their three children Poppy, 11, and Albie, 6, hope their family home will buck the trend. Photo: Steven Woodburn

In the first three months of 2017, eight out of 10 homes on Sydney’s leafy upper north shore sold at auction, according to Domain Group data. Fast forward a year and less than half of properties sold.

At the beginning of last year, 93.1 per cent of homes going to auction in Lindfield sold. This year the clearance rate has slumped to 50 per cent. Ryde, Turramurra and Eastwood have also seen a drop-off in buyer interest.

Others areas in Sydney have suffered similarly. While clearance rates in the city and eastern suburbs have seen a more measured drop from 79.3 per cent to 64.9 per cent, particular pockets saw a more severe slump in buyer demand including Mascot, where 43.5 per cent of homes sold and Darlinghurst, with just under half of homes selling.

“You see a huge drop-off generally because of the tightening in lending standards that APRA put through. You’ve got a lot of apartments, so supply has gone up. That has led to less confidence from buyers,” AMP economist Shane Oliver said.

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He said all these factors were interrelated and were feeding off each other, exacerbating the situation.
Related: Almost half of Sydney homes fail to sell at auction
Related: Melbourne clearance rates fall across most suburbs
Related: State governments needs to boost affordable housing

One of the biggest changes seen in a single suburb was Hornsby. In the first three months of 2017, 86.4 per cent of properties were selling at auction. At the beginning of this year, just 14 homes were listed for auction, of which only a quarter sold.

Real estate agent at LJ Hooker in Hornsby Nick Addison said a huge number of off-the-plan units “flooding the market” were partly to blame for the lack of homes selling at auction, because they had created an oversupply of housing in the area.

Director of Raine&Horne Hornsby Chris Hopkins agreed that 12 months ago the market was buzzing with energy.

“There were lots of developers and lots of property in the area [Hornsby]. It created a bit of energy in the market, buyers felt confidence and their confidence was evident in their bidding at auction,” Mr Hopkins said.

“And so agents were quite comfortable in sending properties to auction because there would be plenty of buyers there.”

But regulatory action and construction has since kicked in, cooling the market and along with it house prices, which will take Hornsby some time to adjust.

“They’re suffering from what I call an ‘indigestion problem’. Long-term interest [in the suburb] will remain strong because it’s on a train line,” said Mr Oliver.

“But because you’ve got massive construction activity which will bring on hundreds of apartments after years of no activity and if it’s sold off-the-plan then your auction clearance rates are depressed,” he said.

That hasn’t deterred Holly Peasland from putting her much-loved Hornsby family home on to the market.

“It’s never really been the right time and we’ve loved the house so much we’ve held onto the house as long as we can but we’ve just outgrown it with three children now,” said Mrs Peasland.

“I think we’re going to sell pretty quickly just because it’s such a nice house compared to properties at a similar price range.”

Selling agent Andrew Searle of Belle Property Hornsby said the price guide was between $1.2 and $1.3 million and believed it would sell because of its unique 1870s character.

South of Sydney, suburbs were also affected. In Brighton-le-Sands, just 31.6 per cent of homes sold in the first three months of 2018 compared to 70 per cent last year with the same number of auctions scheduled, Cronulla dropped to 46.3 per cent and Engadine, not helped by an influx of homes hitting the marked, dipped to a measly 26.3 per cent.

In Maroubra it’s taking longer for homes to sell with homeowners there also experiencing a lack of enthusiasm from buyers. Just 54 per cent have sold at auction so far this year, down from 89.5 per cent for the same time last year. One Maroubra apartment has just sold after it languished on the market for four months after passing in at auction last year at $1.28 million.

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