There is a Lot of Choice Out There in a Buyer's Market

13 Oct 2011 - Louis Christopher from http://news.domain.com.au/

Yes, Sydney house prices are largely holding ground, but it's still a buyers' market and will remain that way for some time yet. And that is because we have a large number of properties for sale now.

Listings surged in September with SQM Research recording a 12.9 per cent increase on August to 34,500 properties. This time last year the rise was 9.7 per cent, to 28,700 properties.

We do get a rise in listings at this time of year with all the spring sale campaigns; however, it appears the surge in listings this year is greater than usual.

Advertisement: Story continues below Rises were recorded in all metropolitan regions, with the biggest recorded for units in the eastern suburbs (17.8 per cent), St George (16.2 per cent) and the northern beaches (14.8 per cent).

Perhaps the most recent sharemarket rout and global concerns of a double dip recession have put caution into the minds of buyers and, for that matter, sellers. Concerns over the future may entice sellers to sell now in case things get worse later.

This most recent trend is not without its precedent. In the sharp downturn in 2008, the northern beaches and eastern suburbs dropped the most. These two regions, of course, generally represent the upper end of the market where buying is driven by senior white-collar finance executives who knew their jobs were on the line.

Our forecast for Sydney remains on track. If rates stay on hold we can expect 2011 to end with moderate house price declines of up to 4 per cent. And next year, we expect house prices to record moderate increases of somewhere between zero and 4 per cent.

In other words, a bottom in this downturn for Sydney can be expected next year.

That assumes the global economy muddles through the European debt crisis and the US stays out of a deep recession. Anything less than that and the cards are off the table.

More so than ever, asset prices of all types, whether they are real estate, shares, gold, commodities and even just cash in the bank, are being influenced by global events.

If the RBA were to cut rates and yet the global economy just makes it through, then we could certainly expect more upside in Sydney. Our forecast for dwelling prices would be in the order of 2 to 7 per cent increases for 2012.

Meanwhile, vacancy rates remain very low because we are building less housing than we did in 1984. That has translated into ongoing rental increases of about 8 per cent per annum and, quite frankly, I don't see rental increases slowing down any time soon. Not unless we have that economic meltdown.

So, buyers, there is plenty to choose from out there. However, good property that is also correctly priced will move quickly, so ensure you get your offer right. Too high and you risk ripping yourself off. Too low and you risk being gazumped.

But just right, taking into account the market conditions, more than likely will secure you the deal.

Louis Christopher is managing director of sqmresearch.com.au.

You can find stock-on-market statistics on his website for every postcode in the country.