- Inflation rermains very high
- Despite this, deals are getting done, says REINSW CEO Tim McKibbin
- The auction clearance rate, for example, has remained steady
As we enter the tail end of 2022, a year marked by decades-high inflation, soaring interest rates, a change in the federal government and the opening of all borders following two years of heavy restrictions, it is now time to asses what may happen to the Sydney housing market during November.
With the cash rate expected to rise by 0.25% this Tuesday, Tim McKibbin, chief executive of industry body Real Estate Institute of New South Wales (REINSW), shares his thoughts on what’s ahead in the next few weeks for the real estate market.
Prices will continue to ease
Along with interest rate rises, the market is still digesting the Federal Budget and inflation figures, both of which came out last week.
Despite a significant revenue windfall, the government is expecting the economic situation to worsen, and inflation is at a level not seen in decades.
“The higher-than-expected inflation figure will most likely force the RBA’s hand again,” he said.
“For prices, this should result in a continuation of the current easing trend.”
Mr McKibbin noted that for transactions, the status quo is expected, with total property listings trending higher over the past few months
Stock on Market – Sydney
“Deals are getting done where expectations are in line with the new market.
“Auctions remain a sound strategy in many markets even though properties may not actually sell under the hammer on the day. Agents are having to work harder and vendors need to understand the buyer’s perspective, especially around borrowing limitations.”
Several data companies measure auction clearances in a different matter; SQM Research data, which includes withdrawn auctions, has shown a decline in both total auctions since April of this year.
As of last week, the auction clearance rate was 46.7%, with 778 auctions. The clearance rate has been hovering around this level for the past few months, with the only notable dip being during the Labour Day weekend.
The number of total auctions has virtually collapsed since April, where 1,000-plus auctions a week were the norm.
Auction Clearance Rate
Calls for a more gentle course
Mr McKibbin noted that higher prices have been witnessed right across the board, and this will continue to impact both the rental and sales markets.
“At some stage, and hopefully soon, the market will need an opportunity to breathe. To be given a chance to absorb the rate hikes to date.
“Last week’s inflation figure represented a 20-year high. In households, budgets are being adversely affected right now.
“Looking forward, it would be advantageous for consumers and the market to no longer be subjected to drastic economic reactions like the volley of rate rises we’ve been subjected to since mid-year.
“It would be better for Governments and bodies like the RBA to steer a cleaner, gentler course.”
