The past month or so has seen something of a mood change: consumer confidence generally has picked up, analysts are predicting solid growth in property values in the mid-term, and the first home buyer frenzy has calmed a bit. 

Here’s an update on our view of the key influencers in the Sydney property market right now.

First home buyers have bolstered the market

The Federal government’s First Home Buyer Boost was originally scheduled to finish at the end of June, which was driving some panic as buyers pushed to beat the deadline, in an environment where there simply hasn't been enough stock in the inner to middle-ring suburbs. 

In May, the grant ($7000 when buying established property; $14,000 when buying brand new) was extended to the end of September at the full rate and then to end December at half the current rate, and we have seen a real easing back in the pressure first home buyers have put themselves under. 

But the generous grants available - there's also the NSW government First Home Buyer Grant ($7000 for either established or new homes) and New Home Buyer Supplement ($3000 for new homes) and Stamp Duty concessions - continue to provide strong motivation to first home seekers to buy a property before the grants are reduced and, for some, before the property value cap of $750,000 is introduced for NSW grants from July 1. 

For investors in that price range there's still some good buying though - it just means you have to choose your property more wisely, be sure you know what its real worth is, and be willing to walk away on any property  where the price is being artificially inflated by first home competition.

In mid-June, the Commonwealth Bank went against the lead of the Reserve Bank of Australia and raised interest rates slightly.  Not surprisingly, the other majors all quickly followed suit.

Nonethless, interest rates are at the lowest they've been for a very long time and are likely to stay around the current level for a while.

That’s encouraging buyers of all kinds, glad to have increasingly affordable loans. 

Combined with the generous government benefits, it’s helping first home buyers get the money they need to enter the market.  It’s also creating an opportunity (generally being ignored – see below) for current home owners to trade up.

Rents are still strong

Despite some speculation that increasing rents would stall as job losses broaden, and despite the move from renting to home ownership for many, rents are so far holding up well in most areas. 

This is good news for investors, particularly while property prices are soft (as long as you avoid the properties being targeted by driven first home buyers).

Buyers are generally being very cautious

Sure, as noted above, some first home buyers are getting a little too keen to spend their government grants but overall the mood among buyers is cautious and responsible. 

They’re aware that forecasts are for little or no growth in prices in the next 6-12 months.  But mostly, they’re wary of the national and global economies and trying to maintain a financial position that could see them through possible periods of unemployment. 

Current home owners are not taking the opportunity to trade up that would otherwise exist given low interest rates and soft prices.

Supply remains limited

Winter is traditionally a slow period in Sydney real estate and the doomsayer predictions of the market being flooded with distress selling have simply not eventuated here.  Combined with home owners staying put rather than trading up, turnover has been low (outside the first home buyer level). 

Auction clearance rates have been really strong in inner-ring suburbs, indicating a continuing shortage of supply against the interest from buyers.

Global investors are coming back

Overseas investors were the first to pull back on Australian property purchases.  Now they’re leading the flow back in. 

Here’s the sort of comment we’re getting from those buyers:

“With the current investment outlook, I dare say this latest investment purchase may not be our last one either.”

Aussie expat and other investors overseas are particularly looking for inner-suburb houses in the $650-$900,000 price range, or apartments at $500-$700,000.

Interest in property is very strong

Open-for-inspections are bursting with people – selling agents report the highest numbers in two years.  Auctions are well-attended – there were 100 people at the auction of a 2-bedroom Surry Hills house at the beginning of May.  And there are consistently 3 to 5 or more registered bidders.

The mid- to long-term outlook is for good growth 

Overall, we remain very optimistic for the 3 to 8-year outlook for property prices. 

The credible forecasters expect most of Sydney’s inner to middle-ring suburbs to achieve value growth of 6%+ per year, over that time.

Get the best advice in the current market and give yourself the best chance of getting the property that’s right for you at the lowest possible price: contact your Finders Keepers Buyers Agents now.