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Buyers spooked as rates bite - Sydney

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  • Buyers spooked as rates bite - Sydney

    Buyers spooked as rates bite

    THE Sydney housing market has shown the first signs of slowing as climbing interest rates and sky-rocketing prices scare off potential buyers.

    Residex figures show auction clearance rates dropped by more than 10 per cent last Saturday to 62.5 per cent, down from 73.5 per cent the weekend before.
    The slowdown follows a buoyant start to the real-estate year with clearance rates averaging about 80 per cent in the first three months.
    Residex managing director John Edwards said interest rates and nervousness about high local prices and the economic crisis in Europe had caused the sharp drop.
    "It's normal for clearance rates to slow at this time of year, but we've suddenly had a 10 per cent fall since the last interest rise," he said.
    Adding to buyer woes, Sydney property prices have risen by 17 per cent in the 12 months to April this year, an "astonishing" figure according to Mr Edwards. The average annual growth rate for Sydney is 6.7 per cent.

    Independent auction house Cooley Auctions saw clearance rates plunge from 80 per cent to 50 per cent in the first week of May alone.
    "There are early signs that the heat's coming out of the market," auctioneer Damien Cooley said. "In the last week, the bidding activity hasn't been as spirited as we saw in February, March and the beginning of April."
    Manly mother Yoness Blackmore felt the market slowdown first-hand after her property passed at auction for $1.125 million last Saturday.
    The Manly home she shares with her husband, Chris, and their children, Alex, six, and Zoe, four, is the type agents dream of: a home in a popular suburb, within walking distance of shops, beaches and transport connections and with three large bedrooms and a backyard.
    "It was disappointing because you psyche yourself before an auction," Mrs Blackmore said.
    "We just timed it badly - We just didn't count on the effect of school holidays and Anzac Day.
    "Whether you're buying or selling, there's nothing good about it."
    The couple's house, still on the market, attracted two potential buyers who had in turn experienced problems selling their own properties.
    But a home in neighbouring Fairlight last week sold for $1.44 million - $240,000 more than the vendors paid just 11 months ago - a typical example of Sydney's sharp price growth.
    Property news, gossip, sales results: Page 111s seen in some parts of the city.
    The two storey weatherboard house at 24 Arthur St was bought for $1.2 million in June last year and sold for $1.44 million on Tuesday, representing a rise in value of 20 per cent, more than three times the Sydney average.
    Selling agent for both homes Georgi Coward of Cunningham Property said she was amazed the Blackmore's Darley St home had passed in as it ticked so many boxes.
    But the signs of a changing market were everywhere.
    Ms Coward said: "People aren't jumping onto properties as much."
    "I expected people to start sitting on the fence and being more cautious when interest rate levels got to seven per cent but they're now starting to do that sooner. We can see it. Over the last couple of weeks numbers have gone down."
    In Sydney's south, a small two bedroom brick home with no view in Kyle Bay sold last week for $1.13 million, almost three times the $418,000 paid for the property in 1997.
    "Is that crazy or what?" said selling agent Sasha Tavic from McGrath St George.
    "I think a lot of people are finding it hard to keep up - it really is a massive growth spurt and we don't know where it's going to go."
    He said growth like that was one of the factors starting to scare potential buyers out of the market.
    Mr Edwards said the drop in values in the lower end of the market recorded in the first half of the year meant the "poor were being stressed significantly" while the medium to upper areas would continue to do well.
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx