Source : the age
A first home buyer renting locally paid $725,000 for a one-bedroom Redfern unit sold by an investor at auction on Saturday, as Sydney’s preliminary auction clearance rate fell to 47 per cent.
The last time Sydney’s monthly clearance rate was lower was in April 2020 as auctions were cancelled due to COVID lockdowns. Initial clearance rates are usually revised a few percentage points lower as more results are reported.
The property at 35/165-173 Cleveland Street drew three registered bidders, all first home buyers who competed for it.
Bidding opened bang on its guide of $675,000. The price had been adjusted down from an initial guide of $700,000 at the start of the sales campaign.
A flurry of small bids of $3000 and $5000 from the three first home buyers lifted the pace until it sold for $725,000, which was $55,000 above its $670,000 reserve.
Selling agent Brigitte Blackman of BresicWhitney East said, “it was an attractive price point for a one-bedroom … the location was central. It had parking.”
“I had a very realistic seller who wanted to sell, and he met the market, and we sold.”
Before tax changes proposed by the federal government, Blackman said she would have expected investors to bid, “just because it’s obviously a good rental unit”.
The vendor is from the Shire. The buyer was renting in Redfern.
The unit last traded for $665,000 in 2018, records show.
The property was one of 865 scheduled auctions in Sydney last week. By Saturday evening, Domain Group had recorded a preliminary auction clearance rate of 47 per cent from 520 reported results, while 213 auctions were withdrawn. Withdrawn auctions are counted as unsold properties when calculating the clearance rate.
The result is four percentage points down on a week earlier, and 22 percentage points below the same week last year.
AMP chief economist Dr Shane Oliver said Domain’s clearance rate of 47 per cent for Sydney is “not looking good”.
“We’ve got this combination of rate hikes, tax changes and low confidence all coming together to push the property market down,” he said.
Oliver said that even if an investor thinks the impact won’t affect them, they may be in less of a hurry to purchase, which has a flow-on effect.
“The common complaint against the budget is that it’s anti-aspirational. It deters people from seeking ways to raise wealth,” he said.
“Housing accounts for about 70 per cent of household wealth in Australia … so as house prices fall, you can have a negative wealth effect where Australian households feel less well off, and they cut their spending as a result.”
He added that investors are running at about 40 per cent in terms of lending, which is a large part of the market that won’t be filled by first home buyer demand. The underlying problem will remain undersupply of housing, Oliver said.
In Roseville, a five-bedroom family home guided at $3.5 million took an hour to sell at auction. Five bidders registered and three bid on the house at 57 Park Avenue.
Bidding opened at $3.3 million and rose in $50,000 and $20,000 increments until hitting its reserve of $3.68 million. Then smaller rises of $2000 lifted the price until it sold under the hammer for $3,782,000 to a young local family.
There is no legal requirement for a vendor’s reserve to be in line with their property’s price guide.
Selling agent Jessica Cao of Ray White Upper North Shore said her vendors “saw the competition on the auction floor today, and they know this is the best price the market can give, and they’re very happy with the result”.
While the whole market has pulled back and buyers are “very, very cautious”, she said, “buyers are still willing to buy because they are usually looking for their forever home, they’ll be here for 20 years plus.”
The house last traded for $380,000 in 1992, records show.
In Croydon, a four-bedroom home in need of a cosmetic facelift in a conservation area sold for $3.45 million.
The family home at 29 Brady Street was spacious, but its main drawcard was proximity to a nearby private school.
Two parties registered for the house, which was guided at $3.5 million.
Bidding opened at $3.35 million and rose in just three bids – one increment of $50,000 and two $25,000 rises – from one bidder, represented by a buyer’s agent.
The property sold for $50,000 under its $3.5 million reserve, which was adjusted to sell at $3.45 million. The buyer is from Annandale.
Selling agent Marco Errichiello of Rich & Oliva said: “The opening bid was very strong and fast, so I think that was the intention of the buyer’s agent … their first bid pretty much wiped out the underbidder, who didn’t want to participate after that.”
He estimated renovations would cost $300,000 to $500,000. “It needs a cosmetic renovation. It doesn’t need a floor-plan change … it only had one bathroom, so they may need to add a second bathroom.”
Errichiello thinks the market has “recovered a little” since the weekend after the budget.
