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Change-up buyers provide optimism for autumn sales

24 Feb 2012 - Andrew Wilson from http://news.domain.com.au/

Sydney's solid housing market is set to continue to strengthen over the autumn selling season, driven by increased activity from change-up buyers and an encouraging economic performance.

The steep rise in loan activity among first-home buyers over the latter part of last year indicates that activity in the Sydney housing market will increase over the first part of this year.

The sellers of established properties to first-home buyers will be active in the marketplace well into the year, putting pressure on the middle price ranges. Any reduced activity by first-home buyers early this year is likely to be offset by increased activity by change-up buyers.

The prospects for increased buyer activity in the Sydney market have also been enhanced by the latest unemployment data released by the Bureau of Statistics last week.

The seasonally adjusted NSW unemployment rate fell over the month of January from 5.6 per cent to 5.2 per cent, the lowest rate since May last year.

Sydney was clearly the standout performer of all the capitals last year with median house prices virtually flat over the year.

This was despite the battering consumer confidence took through the year as a mixed economic performance, both locally and nationally, took its toll on fragile buyer sentiment.

The overall steady price performance of Sydney's housing market last year was an excellent result considering the hammering housing affordability took in 2010 through numerous interest rate rises and a near 20 per cent increase in median house prices.

A closer look at Australian Property Monitors' house price data from last year reveals that despite a relatively subdued market compared with the previous year, 60 per cent of all Sydney suburbs recorded a rise in their median house price over the year, and 22 per cent of suburbs actually recorded annual growth of more than 5 per cent.

Of the suburbs that recorded a fall in median house prices over the year, 63 per cent were in the most expensive price brackets. This indicates that the real weakness in the Sydney housing market remains in the prestige sector, which has been under pressure since the global financial crisis flattened demand.

The unit market produced similar results to the housing market, with 60 per cent of suburbs recording a rise in median prices over the year. However 30 per cent of all suburbs recorded annual median unit price rises of more than 5 per cent.

Despite a generally flat housing market, home loans for owner-occupiers in NSW increased significantly through last year. The ABS reports that home loans increased by 9.6 per cent last year compared with the year earlier.

This was spurred on by an end-of-year surge from first-home buyers taking advantage of the stamp duty concession for established houses before it expired at the end the year.