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Market stability or further decline?

By Bernard Ryan

Our property market is in decline, so the press says. However, being at the coalface, I am not convinced that is the case – at least for our market.

Would a market in decline have 29 buyers attend the first public inspection of a $6.5m Spencer Road home in Mosman? Would that property have four contracts issued within a week of being on the market and then sell for a street record within 8 days? This buyer response to a house like this is not emblematic of a market in decline. Four other sales (from McMahons Point to Mosman) over the past week would give further weight to the idea that this market has moved into a period of stability.

Are we in a different market to 2021? Of course we are, that was unsustainably overheated. However the Lower North Shore is a market that reacts quickly and when prices ease, supply contracts. That’s why if you track long term price movements (in our market), you see positive growth followed by a quick correction then prices plateauing.

Supply – not interest rates – has driven our market since 2000. This was even the case in the post-GFC period when there was real concern. Such negative economic sentiment meant prices fell in the first and second quarters post the GFC trigger point and then, with chronic supply shortages, prices stabilised before a modest upward trend began.

History (and the media) repeating itself

Then, like now, vendors influenced by the media headlines didn’t put their properties up for sale; they withdrew stock from the market. Listing volumes contracted and the market became a function of the very crux of any property market: purely a function of supply and demand, not driven by macro issues like global financial crises or interest rates.

From December 2021 through to March 2022 we’ve seen our market correct down. In the first quarter of this year we saw a settling in the market as more property listings came online and buyer urgency was obviously tempering.

During the GFC the Lower North Shore market contracted downwards, depending on the type of property, anywhere between six and 11 percent. Homeowners were concerned but not in a “forced to sell” position so the market quickly recalibrated.

An overly heated or an overly depressed market place isn’t good for either buyers or sellers. A more normalised and balanced set of conditions provide a fairer and more sustainable market for all.

It will be interesting to see how Q1 and Q2 of 2022/23 unfold. With such unprecedented growth over 2020-21 we will soon see (especially in this coming Spring), if the stability vs decline debate has any further merit.

If you would like to discuss the current market and your requirements, please get in touch.

Bernard Ryan
Director | Licensed Real Estate Agent
+61 408 408 509
bernard.ryan@raywhite.com

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