Numerous sellers in diverse areas around NSW are having a tough time getting their properties to change hands for acceptable prices, and one of these areas, quite surprisingly, is the Sydney CBD
It’s been a long wait for the Joyce family. Their beautiful face brick home, up for sale in NSW’s mid-north coastal community of South West Rocks, has had its asking price dropped many times, but with no luck. More than 320 days since they first listed it they still haven’t found a suitable buyer.
It is a fate shared by the owners of 310 Tuggerawong Avenue in Tuggerawong, some 250km south. Their property has been on the market for over 500 days, as of yet, unsold.
In fact, all across NSW, numerous sellers are having a tough time getting their properties to change hands for acceptable prices. This is as areas as far apart as South West Rocks, Tuggerawong, Green Point, in the Hunter Valley, and Ourimbah, on the central coast, all experience average property listing periods close to a year, according to RP Data.
These suburbs have been joined by a host of other affordable suburbs, in regions ranging from the Central West to Sydney and the Northern Rivers, where buyers remain largely absent from the property market.
One of them, quite surprisingly, is the unit market in the Sydney CBD. Right in the heart of the city – in what is arguably a highly desirable location – the average listing period for units during 2012 was just over four months (according to RP Data). This is a stark contrast to two years ago when properties in the same area where selling within 50 days, on average.
“It has to be acknowledged that during 2012 market confidence, or lack thereof, had an effect across the entire spectrum,” says Tim McKibbin, chief executive of the Real Estate Institute of NSW. “The greatest challenge we face in 2013 is installing that much-needed confidence back into the market.”
Sourcing the problem
McKibbin says that over 2012 there was a reduced level of transaction activity and he believes that much of this had to do with public perceptions of the Australian economy.
“I accept that some parts of the world, particularly the Euro zone, are in the midst of serious economic difficulties, but I believe Australia’s response to what is happening overseas has been disproportionate to the true impact that global economic difficulties have actually had on Australia.
“When the market realises that it has reacted in an overly-cautious manner, and we see continued improved economic performance in the United States, I believe we will see slow but solid improvement in our market’s confidence,” he says.
LJ Hooker CEO Georg Chmiel agrees that buyer confidence has been guided by perception, but this perception has not always fit with reality. “Reports in the media about international economic woes and the sometimes over-dramatization about the state of the Australian economy did not help, especially during the first half of the year,” he says.
Chmiel adds, however, that a similar situation is unlikely to occur over 2013, due largely to an improving market. “RBA rate cuts take between six to 12 months to filter through to property markets. [In 2013] we will start to see the market turnaround. First homebuyers will also return to the market and make purchasing decisions after having retreated from the marketplace when temporary boosts to first homeowner’s grants ended,” he says.
Waiting for improvements
Chmiel’s estimate – that it will take some six to 12 months for RBA cuts to improve buyer confidence – could partly explain the recent findings of the Westpac Melbourne Institute’s latest index of consumer confidence.
According to the institute’s chief economist Bill Evans, in January the index remained 2.7% below the level it was in November 2011, regardless of 150 basis points of rate cuts.
The index also found that assessments of current family finances were 8.6% down on 2011 figures, with outlook for the next 12 months down by 1.2%. The one positive is that sentiment toward buying a house has gone up 11%. This puts this measure close to highs seen in 2009 when house prices lifted nationally.
For Australian Property Monitor’s senior economist Andrew Wilson, results like these add up to patchy prospects for improved consumer confidence. “We still have fragile buyer confidence,” he says. “Housing markets are performing reasonably in NSW, but it’s still patchy and it’s still mixed, so we’re not out of the woods in terms of a general upturn in sentiment and activity.”