Fortune favours the brave

Wayne Johnston, confident of finding a bargain soon. Photo: Tamara Dean

There are fewer people taking out home loans this year and fewer people at open for inspections. In some areas, agents say there are half the number of buyers and prices have dropped up to 10 per cent compared with last year. These are uncertain times in the property world. Analysts seem confused about the future in the wake of the two most recent interest rate rises and the nosediving world economy.

Despite a price surge last year, anyone who says the market's firing at the moment is kidding themselves. As mortgage stress widens and forced sales occur in some areas, buyers throughout Sydney are understandably cautious. This is reflected in auction clearance rates, which are significantly down on last year.

The February home loan approval figures released this week show a drop of 5.9 per cent. It was the first fall in four months.

Gerard Minack, an economist with Morgan Stanley, was reported last week as saying if there is a recession, Sydney house prices may fall 30 per cent in the next few years. And not just in Sydney's west - in exclusive pockets, too. Holiday house prices could halve, Minack says. Even without a recession, Sydney prices could drop 10 per cent.

Such gloomy predictions send a shudder through every vendor and agent. But BIS Shrapnel takes a completely different view, predicting Sydney houses could jump 40 per cent over the next five years.

Michael McNamara, general manager of Australian Property Monitors, reckons the reality will be "somewhere in the middle".

"Buyer confidence has been significantly eroded and that means for real estate agents that there aren't the volume of buyers coming through open for inspections that there were last year," he says.

For bargain hunters, market uncertainty is great news. "It's getting to the point where they're spoilt for choice ... they're going to be in a strong position to negotiate," McNamara says.

But, agents say, vendors needn't despair. Good prices are still being achieved in many suburbs.

APM's average auction clearance rates for the first 10 auction weekends of this year (from February 9 until last weekend) are revealing, compared with the final 10 weekends of last year.

Publication: Sydney Morning Herald
Author: Stephen Nicholls and Anna Anderson