2016 Market Wrap & 2017 Preview with John Cunningham
For property consumers on the Lower Northern Beaches, the past year has really been a roller coaster ride of frustration and elation.
For buyers, frustration with the lack of property choice and rampant price increases, and for sellers the elation of high prices and above expected results.
The irony of this situation is not lost on most consumers as the reality hits home when the majority of consumers fit into both categories. We call these consumers change-overs, the people who buy and sell in the same market and they make up the majority of transactions - 48%, followed by investors 32%, first home buyers 15% and then overseas buyers 5%.
This mix is common across Sydney but on the Northern Beaches there are more people in the first category as we have a higher level of owner occupiers than most of Sydney.
We saw inconsistent value increases with most localities seeing around 10% to 20% increases in values following on from the 15% to 25% increases in 2015.
There are many reasons for the inconsistencies as each locality has its own mini market and also has varied supply/demand levels, for example the upper end of the market ($3mil+) has naturally seen the lowest level of sales but also the lowest level of value increases.
Whereas the mid level of the market, being family homes ($1 mil to $2mil) has seen the greatest value increases due to the exceptional high level of demand. In this sector of the market we have averaged 12 groups inspecting at Saturday open homes through the year with our highest number being 84 at one open home - so you can see where the pressure comes from.
So what can we expect of the coming year, more of the same or a bit more sensibility? Well following on from all the experts' tips this time last year, where we all said that the market would cool, the answer could be…who knows?
But I will go out on a limb again and predict a far more stable market with increased activity fuelled by more stock coming on the market as we have seen in November, coupled with a different set of buyer/seller attitudes.
When the market peaks and then peaks again for three consecutive years it cannot sustain that level of growth and having seen around 60% growth over 3 to 4 years, things need to slow down. The way for that to happen is to have more stock in the market providing buyers with more choice.
Interest rates being at an all time low has fuelled the frenzy but we need the market to settle, and settle quickly to avoid the peaks and valleys syndrome and this will also give first home buyers at least some chance of getting into this over heated market, something that unfortunately is getting harder and harder.
I think we are all looking forward to some normality and I believe 2017 will be the year to deliver it.