Current Market Insights
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Current Market Insights
Episode 94: Spring Market Begins – Rain Delays, Rate Cuts & Rising Buyer Demand
Hosts Ciaran O'Brien and Peter O'Malley analyse the opening weeks of Sydney’s spring property season. Relentless rain has delayed listings, while three recent rate cuts have eased mortgage stress and reduced urgency for some sellers. Despite fewer properties on the market, conditions are strengthening with clearance rates notably higher than last year.
We also discuss:
- The three distinct phases of Sydney’s spring market:
• Mid-August to end of September
• October long weekend to early November
• Melbourne Cup Day to mid-December - Tradespeople in high demand, many booked until 2025, slowing property preparations
- Current market indicators showing rising prices, stronger buyer inquiries, and shorter days on market
- First home buyer incentives beginning October 1st — yet to significantly affect buyer behaviour
- Global inflationary pressures limiting likelihood of further RBA cuts this year
- Signs of buyer regret as some realise they missed the bottom of the property cycle
As always if there is a specific topic you would like for us to cover, please reach out and let us know!
All down, all silent, going, going, going, gone. So congratulations.
Speaker 2:Welcome to the Current Market Insights podcast brought to you by Harris Partners Real Estate. Each episode we chat with real estate author and industry leader, peter O'Malley, to discuss the current property market conditions and provide insights to assist you on your property journey.
Speaker 3:Hello and welcome to another edition of Current Market Insights. I'm your host, kieran O'Brien. With me is Peter, mr Peter O'Malley Hello.
Speaker 1:G'day, kieran, great to see you.
Speaker 3:Great to see you, peter. I want to spend today's episode going through a bit of a spring market preview, given that at the time of recording we're now in the first couple of days of September, the spring weather's come out I'm, you know, in shorts and plenty of other people out across Sydney are enjoying the change. So I thought it might be a good idea just to talk through today what we can expect from the spring market this year in particular, given that it's been a bit of an unusual time and what your experience over the last couple of weeks and then really the first couple of days of September have kind of told you and what indications you have seen that shape up what the market's going to be like and how you think the property market across Sydney will actually respond in light of all the kind of things that are happening across the market.
Speaker 1:Thanks, kieran. Look, I think the first thing to say about this year's spring market is it's off to a slower start than what it was last year in terms of increasing stock levels. And that probably goes back to the point you just made there about the weather In Sydney. For those that weren't here or don't know, sydney essentially had four to five weeks of relentless rain and there would have been, and was, a lot of people during that period that had plans to get their property ready to come to market painting the externals, getting the garden right. That couldn't do anything, essentially, so we've seen that feed through to on-market listings being down at the moment as to what it was last year.
Speaker 1:Last August we had really good weather through August and it fed to spring campaigns beginning sooner than what's happening now. Obviously, the weather in Sydney is absolutely superb at the moment and I think you will see a big jump in stock after the October long weekend as people are able to get their properties ready for market. The other thing that I think anecdotally have kept stock levels tighter this year than last year is the three interest rate cuts this year have helped those that are mortgage stressed. There's less households in mortgage stress now than what there was this time last year is how we're feeling and seeing things. Anecdotally, so, that's also had a suppressant effect on the number of listings coming to the market, which is a which is a really good thing yeah, interesting, uh, interesting couple of points there.
Speaker 3:I wonder, just going to your first point there, about you expect that the market will surge in terms of stock on market after the October long weekend. Now, is that typically later than you would normally see? The spring market does it, you know? Does it usually fall in line with September's beginning? The weather comes out and bang all of the stock hits on that first week or first weekend in September, or is there usually a little bit of lag? You know we talk about in the April market? There's always, you know, even early year, after Australia Day or potentially after Easter. There's set almost like arbitrary markers of where you know flag posts of where the market will kick off. Is it usually as late as October long weekend or is it a little bit delayed because of that weather?
Speaker 1:No, the October long weekend onwards is what I would call phase two of the spring market, kieran. So each year this is unofficial, of course. If you think mid-August to the end of September start of the school holidays there, that's phase one of the spring market, which is where we're at now. Phase two of the spring market is really the beginning of October, after the long weekend here in Sydney, because that's not a national holiday, but it is a holiday in New South Wales up until early November and people that have a spring selling mentality will usually target phase two of the spring season.
Speaker 1:That's where stock levels peak and that's where buyers get complacent that the market's falling. There's too much stock on market. We're just going to wait around and wait for a bargain of a lifetime. And then what happens by early November is all the forthcoming vendors say you can't sell this late in the year. This is not a an appropriate or an intelligent time to put our house on the market. We're going to wait for the new year in February and then you get a third phase of the spring market which is basically, call it November, melbourne Cup day onwards. Up until mid-December you'll see a rush of listings to market from those vendors that don't want to wait till the following February, march to sell and settle their sale. They'd rather do it in the existing financial year. So we're in phase one and there's no doubt that stock levels are low, and the low stock levels, combined with the third interest rate cut of the year, is seeing prices rise.
Speaker 3:So we've got an interesting kind of conglomeration of events. I think you mentioned the weather's been and it has been absolutely horrific seemingly endlessly. I know you say five weeks, but honestly it and it has been absolutely horrific seemingly endlessly. I know you say five weeks, but honestly it feels like it's been running forever.
Speaker 1:Yeah so we don't like to talk about the weather on a podcast. We're talking about the weather as a cliche, but in this instance it was an extreme weather event that has actually spilled over and played a role in how the property market this year is playing Absolutely and, as you said, that's the reason we talk about it.
Speaker 3:Given your prediction that the October long weekend is something of a delineator for the second phase but in this case really maybe the first phase of this spring market in its totality, and also given and we won't spend too much time on this, but given that the government's brought forward kind of incentives or kick-off in October, do you think that there is likely to be an increased frenzy? Firstly because those incentives come in from the 1st of October? But also, do you think there's any impact from that new date impacting sellers who were considering coming through in the first phase now saying, well, bugger it, we're going to hold off and be nice and fresh when those incentives come in?
Speaker 1:No, not unless those prospective vendors have been advised that way by their agent Right. What we're seeing which we'll talk more about in next week's episode and the likely impact of the home guarantee scheme that's due to come into effect on October 1, is we're seeing a lack of understanding in the marketplace about the role and the positive impact that policy could have on the market. Now I'm sure that the first home buyers out there are becoming acutely aware of the benefits on offer and will be lining up to take advantage of it and hopefully for them, escape the clutches of the rental market, which are pretty brutal at the moment, that we've discussed all year. But no, I would not say that anyone is holding their property back to coincide with the incentives on offer from October 1 for first home buyers.
Speaker 3:Okay and just touching on you, you talked about those sellers who might be looking to do some simplistic kind of renovations or touch-ups or getting the property ready for a sales campaign that may have been delayed realistically. Let's say, someone tried, needed to do external painting or driveway or, or touch-ups, or getting the property ready for a sales campaign that may have been delayed realistically. Let's say, someone needed to do external painting or driveway or whatever it might be, and they've been pushed back because of this rain. Realistically, do those sellers now have enough time, given the labour difficulties and costs and blowouts and all these other delays? I mean, do those people realistically have a good chance of getting to market in time to capture that october long weekend? Or has this rain rain delay? You know, to use a cricket term, has that kind of pushed some of these people back substantially, you know, potentially into the much later phase of the year?
Speaker 1:look. It depends on the scope of works and the trades people that they're working with. So we found ourselves this year getting a lot of properties ready for market on behalf of the vendors and doing cosmetic makeovers for them, and I was going into situations where the house was in no condition to be marketed. And I would say to the owners if you start ringing tradespeople, you're going to find it difficult enough to get a solid quote and then you're going to be in the tradesperson's timeline and you won't be on the market until March, April next year, given what you've got to do, from where you're at now to being inspection ready.
Speaker 1:And I've said to probably a dozen people this year look, just if you don't mind, hand it over to me. We've got a team of people that will take care of this for you and get you market ready clear the house out, paint it, recarpet it, put a new kitchen or bathroom in if that's required, landscape the garden, but get your market ready without blowing the budget. So there's not one right answer to the question that you've just asked. As a real estate agent, you do pass a lot of work out to trades people and you expect a certain level of service coming back when you're a individual homeowner and you want to get your house ready for market and you deal with a gardener or a painter once every five or seven years, there might be a big job that you've got for that particular trades person, but you're actually not ongoing work. Yeah so you're actually not ongoing work.
Speaker 2:Yeah.
Speaker 1:So you're a one-off customer, so you don't get the same priority that repeat customers or pipeline customers get. And that's where those that are taking the preparation of the house on their own shoulders will find it frustrating. Because, as I say, in this environment where tradespeople are at a premium, getting a quotes and effort, never mind getting the job done getting the job done on budget and on time.
Speaker 3:Yeah, and part of the reason I ask that question is, you know, are there, firstly, any ways that, as an agent, you can help mitigate that circumstance, because it is expensive at the moment? We know that that's a legacy from COVID, but it is one of those things, you know. I wonder, for our sellers, or potential sellers who might be listening, who are thinking about taking advantage of spring but have been unsure or been put off by everything that's happening around them. You know what kind of timeframe if they decided they wanted to sell this week, you know early September, assuming there's nothing really needs to be done can they get on in time to capture that long weekend surge, or are we still kind of facing a bit of a protracted period of readiness, I guess, to get out there and capture the market?
Speaker 1:Well, to give you an idea, one of the tradespeople that we deal with a painter said Peter, no more work until next year. That's it Right, I'm booked out until the end of the year. We're in the classic silly season now where everybody's scrambling to get things done at the end of the year. Now, fortunately, we've got other painters that we can call into action to replace that particular painter, but the big jobs that we've we've given him a line along with his natural pipeline of work means that he's done for the year yeah in terms of bookings.
Speaker 1:Uh, so it's, it's, it's not easy and um, uh, everything post-COVID now, as you know, needs to be thought out, planned and mapped. If you're going on holidays, you nearly need to pre-plan your activities, because if you plan on doing your activities when you get to your destination, what do you usually find out?
Speaker 3:Everything's booked out Booked or more expensive than you thought it was originally, or there's always some caveat, right.
Speaker 1:Yeah, there's a last-minute hike in price because you're a last-minute customer rather than you know a standby rate or whatever. So that's the challenge for anyone that suddenly decides they want to sell but they need to get their property ready is have I got the ability and the people at hand to do so? And I think for many prospective vendors out there that are in that situation you just outlined speaking to the local agents and saying, yeah, we want a selling plan, we want a price on the property, we want a fair fee, we want to understand how you'd go about selling our property, but we also need you to help us present it.
Speaker 3:Yeah, well, that's yeah, being upfront and honest with your agent or you know, all the agents in your area can give you that info and given then that the market is naturally a little bit slower and I know SQM research have made some commentary that listing numbers are down on the traditional values that we might see in August, that phase one Talking pragmatically then your experience over the last couple of weeks with the terrible weather. Obviously you can only comment so much on the listings that you're working with at the moment, but what's your feeling been, just in terms of conversations, post rate cut, uh, you know, post or you know mid weather crisis that we've had coming into the season that, throughout your entire career, has been the busiest? What has your take been in terms of the, the uh, the feeling or the vibe on the ground from buyers and sellers, just in terms of the general sentiment, is it, is it aligned with what the market is showing? Do you think or is there a bit of disparity out?
Speaker 1:there. No, I think it is starting to line up, and it might be a bit of a concern to the rba how responsive or reactive the market has been to the rate cut. I think we mentioned last week that the yeah rates were cut on July 18, I think it was yeah, but my bank didn't reduce my rates until August 22.
Speaker 3:Yeah, I only got an email. Yeah, it must have been a week or two ago with the announcement.
Speaker 1:Yeah, so most people are reporting an enthusiasm for the rate cut, but that's the sentiment. The actual rate cut's only just. You know what are we today, september 2 or 3?
Speaker 3:Well, sentiment, the actual rate cuts. Only just, you know what are we today, september two or three? Um well, I don't know about you, but I get the email telling me it's happened and then we'll do it in six weeks or something you know. So it may not actually start till october anyway that's.
Speaker 1:That's that's the letter telling you they're ripping you off a hundred percent in a nice way. You should be happy about it. Um, so yeah, when we look at um key in the key market indicators, um that that give us a sense of how the property market's performing inquiries and inspection attendees are up, bidders per property are up, days on market are down. The price indexes whether it be cotality, the old CoreLogic RP data, sqm research PropTrack what's the domain? One Property Finder SQM Research PropTrack. What's the?
Speaker 3:domain one Property Finder Price Finder. Price Finder there you go.
Speaker 1:All of those indexes are suggesting that prices and the market is healthy and potentially rising and that's correlating with what we're seeing on the ground.
Speaker 3:yeah, yeah, so it's certainly an interesting period. Do you think that the buyer sentiment is going to shift in the coming weeks in anticipation of the government's incentives? Obviously it only impacts a small portion of the market, but do you think and again, we won't spend much time on this, given we'll do another episode next week about it in total but do you think that that sentiment is likely to get a little bit more kind of aggressive or firm from the buyer side as there is a bit of government stimulus and support to help people get into the market? Do you think that comes with this almost inflated sense of you know confidence or you know certainty, or about their ability to purchase? That may or may not be justified.
Speaker 1:No, I'm not seeing a movement at the moment. I think it will come, but there's not a movement where I would encourage anyone to think that there's going to be a different or a new market environment on October 1.
Speaker 3:Yeah, okay, I asked the question because I listen to people all around me all the time and, anecdotally, I feel like I'm hearing more and more conversations just in my periphery, of people that I kind of engage with either socially or professionally having conversations with agents about purchasing property, and I feel like the same people weren't having conversations three months ago, but now, almost in anticipation, I'm just hearing all these peripheral conversations about oh well, yes, we'll come and look at this now we can do this, or you know, I feel like there's this and it might be the market segment that I associate with but well that that feeds into what I just said about inquiries and inspection numbers are up, but I'm not.
Speaker 1:I'm not seeing the link between an increase inquiry inspection numbers because of the forthcoming changes to the you know, the home guarantee scheme introduced by the federal government. I think once the market fully understands the target market being first home buyers, once it fully understands the magnitude of what the government have implemented, um and the carrot that's on on offer there, I think they'll go for it. But it just doesn't look like in that segment of the market it's going to happen this side of christmas.
Speaker 3:No, fair, fair well, given that we uh, we've touched on some of the market, is going to happen this side of Christmas, no, fair, fair. Well, given that we've touched on some of the kind of practical elements of the spring market, the delays, what you're seeing on the ground, if you can, why don't we have a bit of a look at the numbers that SQM Research have put out this week? You know, for our listeners who are new or maybe don't listen to us all that often we refer quite a lot to louis christopher and sqm researchers work because they're quite a quite an articulate and deliberate house. That report, really, what is the true data and we use them as a bit of a yardstick to measure how the market is performing. So, given that we're suggesting it's a slower start to spring than usual and you know sentiment is strong but it's it's not as strong as it could be what is the the data showing us, peter?
Speaker 1:uh, look, when we say it's a slower start to spring, that's spring on spring. Yep, uh, year on year, for for um the last weekend in august or um the first weekend in september, as it will be this this weekend, of course, and the reason I make that point is that last weekend was a jump in auction numbers from around 800 the week before to 1,123 properties in the last week went to auction in Sydney. So week on week that's a massive jump, but year on year it's actually a pullback in listings on market.
Speaker 3:So I can give you the exact figures actually. So, looking back at so the week ending 1 September 2024, so very you know, basically the same weekend total auctions were over 1,200 this time last year and obviously 1,100 odd. So not I mean not an enormous disparity, but still a disparity. But I think one of the big things was the auction clearance rate was under 50% last year in the 48 mark which, if our listeners remember, that was about the time that that terrible run really started, with the auction clearance rates absolutely plummeting in August. So it is certainly back on the year before, pretty consistently actually across all the segments, the time of week, et cetera. It is quite a drop back from the year before with also so what you've outlined?
Speaker 1:there is maybe a 10% drop.
Speaker 2:Yeah.
Speaker 1:Nearly a 10% drop.
Speaker 3:Probably just over 10% yeah.
Speaker 1:Yeah, yeah, in the number of properties going to auction but conversely, the auction clearance rate for this weekend to auction, but conversely the auction clearance rate for this weekend, uh, week just gone was 56.4.
Speaker 3:where this weekend last year was in the high 40s 48, so about 10 higher clearance rate as well, and not to the other thing not to uh overlook is this we report on auction clearance rate because that's a much uh more kind of tangentially stat. There is also plenty of private treaty properties out there. There's other things on the market there are. Total listings are also different to this number.
Speaker 1:So, again, this is not scientific. But if we go to Louis Christopher's assessment of the market, he says we begin to record price falls at and below 50% auction clearance rate. Yep, and this time last year we're running at a 48% auction clearance rate, which, you quite correctly point out, did not break 50% until they cut rates in February 2025, which was pretty we talked about it every week.
Speaker 1:It blew us away Six-month stretch where the auction clearance rate was sub 50%.
Speaker 1:But here we are now where it's. You know it is climbing steadily and it's 56.4% for the last week and I think that should go higher in the weeks ahead as more buyers come out to play. We always like to just give our listeners a little bit of a breakdown about homes sold under the hammer versus auction campaigns sold prior. So last week, 323 homes sold prior to auction with 310 sold under the hammer. So that's a bit of a breakout stat there where selling prior to auction for whatever reason whether it was a standout bid or not enough competition to take it all the way to auction was the preference. So all of that suggests not a booming market but absolutely improving market. And as we've said in our September newsletters and I'm already seeing this at open houses some buyers are annoyed annoyed at themselves, because they're looking at the crowds at open houses and seeing the results that are being achieved and they're realising they've probably missed the bottom of the cycle because property prices are moving off their lows from late 2024, early 2025.
Speaker 3:Yeah, good observation, peter. My only final question for you then, as we wrap up today given that the uh auction clearance rate let's compare with last year is, you know, roughly 10 stronger than this time last year uh, but stock is slightly down do you think, with the coming weeks and the likely increase in stock, do you think that the market is well enough positioned that that clearance rate will hold, hold or climb above 50%, or do you think that there might be some correction there as more stock comes on and dilutes the market? You know, not not exponentially, but has some dilutionary effect on numbers?
Speaker 1:oh look, unless there's an event and I think you need to have spoken about the RBA statement over the last few months and I'm and I bring that back up now because I'm watching what's happening on money markets there's lots of, there's a vibe there happening in the equity markets and the bond market that can't be ignored. So, as we speak today, the Australian share market's down 2% for some reason. So let's say, inflation globally is rising again. That's the other point. Last night european union released their their inflation numbers. It's going back up. The uk is going back up inexplicably. The us is going back up but trump is bullying jerome powell to cut rates at a time that inflation is trending up, which is why gold is going through the roof.
Speaker 2:Yeah.
Speaker 1:I don't know if you're following the gold price, are you?
Speaker 3:No, I just I occasionally look because my father's still got gold stashed away in his safe.
Speaker 1:You're a smart man, he's. But yeah, the gold price is going up on the back of Trump. You know has essentially Jerome Powell's orbit said he's going to cut rates at some stage in the near future, even as inflation's going up. So you know the gold price is hitting all-time highs this week at a time where share markets are coming off. But if the economies stay on their track and there's not a major event, I think you'll see auction clearance rates go through 60% and I think you will continue to see price rises.
Speaker 1:And because all of that is happening, I don't think you will see another interest rate cut this year. The only way you'll see an interest rate cut this year, in my view from the RBA is if there's an event that they're alluding to in their statements globally and they feel like they need to step in and rescue the Australian economy. I'm now seeing much clearer. I didn't quite see it at the time in July, but now that the inflation is starting to pop in those economies that have been more aggressive with their rate cuts in the last few months than the RBA were, I'm now seeing why they held in July, because underlying inflation while statistically it might be where it needs to be is ready to go again.
Speaker 3:Well, that, to me, just really highlights what we often talk about with the RBAs that they have access to data that we could only dream of, and while we can sit here and nitpick all of their comments and say it's ridiculous.
Speaker 3:they didn't cut or do this or go further. We've always underlined and said actually they are seeing things we could only imagine, and you know that's a perfect example. Look, really, really great topic today, peter. The spring market is always a hot one in real estate and I think this year it started a bit slow potentially, but I expect that we will see a bit of a kick, as always. I appreciate you coming in and having a chat with us here on the podcast. Thanks very much, kieran. Thank you and thanks to everyone for listening to Current Market Insights. We look forward to speaking with you next time.
Speaker 2:Thanks for joining us on the Current Market Insights podcast brought to you by Harris Partners Real Estate, the podcast providing real estate insights you won't find anywhere else.
