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Treak Real Estate Property Update: November 2022

Welcome to the Treak Real Estate Property Update: our regular round-up of news from the Sydney and national property markets, as well as what’s happening right here at Treak!

Supporting Sydney’s homeless

As part of our Real Estate for Good initiative, at Treak we recently took part in the Long Walk Home, which saw us walk 28km for charity, which is the average amount a homeless person must walk every week to find a place to sleep and access the support they need.

We’re proud to say that on our journey from Parramatta to Kings Cross we raised over $1200 for Wayside Chapel, which brings our fundraising total to $15,682 over the course of our two years in business.

Our clients play a critical role in our Real Estate for Good program. For every property we lease throughout the year we donate a meal to Wayside Chapel’s Donate a Plate drive, which provides a homeless person with a delicious meal with all the trimmings on Christmas Day. If you’re looking to lease your property, and do a little bit of good in the process, get in touch!

Putting Sydney’s house price falls in perspective

You may have heard the rather significant numbers in the news recently: Sydney house prices have now dropped 10.1% since their February peak, which is the equivalent of the value of the average Sydney home falling by approximately $116,500.

The reasons behind this double-digit decline are well-documented, most notably the six successive cash rate hikes this year (with the prospect of more to come). It’s also important to note that the February price peak, while great for homeowners, also represented record low affordability for those looking to enter the market. In short, something had to give.

But – and there’s always a but – Sydney property prices are still well up on the COVID trough of two years ago. Between the 2020 low and the February 2022 peak, the price of Sydney dwellings rose an incredible 27.9%, equivalent to $252,900 of value being added in less than two years.

Forget that 10.1% decline – prices would have to fall a further 11.4% to go back to the levels seen at the beginning of COVID. And according to the latest figures, the price fall seems to be slowing: compare a 2.2% decline during the four weeks ending 3 September to a 1.3% decline during the four weeks ending 23 October.

Where have all the A-grade properties gone?

With prices falling since February, now is the time to snap a quality property at a good price, right?

It would be, if such properties were on the market. But as any prospective buyer will tell you, there currently seems to be a real shortfall of quality, investment-grade housing stock. But why?

The reality is that higher interest rates and higher inflation fuel a bad news cycle that has a negative effect on consumer sentiment, particularly in the property market. Owners tend to play it safe in these circumstances, postponing sales until consumer sentiment and property prices recover.

Sure, higher interest rates will mean that some owners will be obligated to sell due to financial hardship, but these instances rarely occur in investment-grade locations, where wealthy owners are largely insulated from market conditions.

This isn’t to say that buyers and investors should give up – difficult doesn’t mean impossible. Now is an ideal time to employ a buyer’s agent like Treak, as we have access to 100% of the A-grade properties available at any given moment, including the wealth of off-market properties that buyers would never otherwise know about.

As a buyer’s agent we also help you to act faster and negotiate more effectively. Reach out today to find out how!

Auction clearance rates

Another key indicator of the health of the property market is the auction clearance rate. Last weekend 64% of auctioned properties were sold, compared to a slightly higher 75% this time last year (according to Domain). The weekend’s figure was up from the June low however, where clearance rates averaged 57.2% for the month but dipped as low as 47% at certain points.

Spring season is known as selling season, and it has once again brought more buyers into the market, who will at this point be looking to secure and finalise a purchase by Christmas. This has led to an increasingly busy auction scene, with 818 homes auctioned held last week, compared to 632 the week prior.

As we get closer to Christmas these numbers will dwindle, as agents advise vendors to list their properties in the new year. But all is not lost for those looking to buy, because at Treak we have a large database of pre-market and off-market properties for our clients to peruse. You could find your dream property in our exclusive collection even as the normal channels dry up over the festive season!

Do I buy now or wait?

When is the best time to buy? As many a financial planner will tell you, it’s when buying is unpopular, as fewer buyers means less competition, and less competition means lower prices. These low pressure periods also grant you more time to conduct important due diligence.

If we zoom out a little, and take a broader view of all the figures we’ve listed above, we see that the turbulence caused by interest rates, inflation and other cost-of-living pressures has placed many would-be buyers on the sidelines, at least for the moment.

In these cases demand for properties doesn’t dissipate over time – it builds. When conditions stabilise, this pent-up demand tends to be released, which can cause prices to soar.

With Sydney prices down over 10% since February, right now is a great time to buy – but only for those who have all their ducks in a row. This means:

  • You have a robust financial plan that accounts for higher interest rates and other potential fluctuations in the market.

  • You have talked to an expert about securing up a property in a way that protects your assets and minimises tax.

  • You take a strategic approach to your property purchase that takes emotion (and the associated risks it can bring) out of the picture.

Looking to buy? We’re ready to help! Check out our latest purchases here.

Renae Treak


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