Summary
Auction clearance rates remain one of the best indicators of how the property market is performing. Traditionally, a clearance rate above 50% signals a seller’s market, while anything below 50% indicates buyers have the upper hand.
Since mid March, Sydney’s auction clearance rate has fluctuated between 40.82% and 31.92%, according to SQM Research. There’s no doubt we’re still in a buyers’ market. However, after four months within a relatively tight range, there are signs the market may be starting to find a floor.
Following the Federal Budget announcement on 12 May, which proposed limiting negative gearing and removing the capital gains tax discount for residential investment properties, many expected conditions to weaken further. Instead, clearance rates have remained between 30% and 40% for almost four months.
In financial markets, this type of sideways movement after a decline is often viewed as consolidation, where a support level begins to emerge. While property isn’t a traded asset, the same concept can apply. The market appears to have reached a level where buyers are still willing to transact despite ongoing uncertainty.
That support level is now about to be tested.
This week, the Federal Government announced further restrictions on residential property purchases through self-managed super funds. Combined with the quieter winter selling season, we’ll soon see whether this range represents a genuine floor or simply a pause before further weakness.
Another indicator worth watching is days on market. According to SQM Research, 43% of Sydney properties currently listed for sale have been on the market for more than 60 days, highlighting that buyers remain firmly in control.
For now, the market no longer appears to be in freefall. Instead, Sydney seems to be searching for an equilibrium, where buyer demand and vendor expectations begin to align. Whether this range ultimately proves to be the bottom will become much clearer over the coming months.
Dan Grantham is director of Grantham Buyers Agents.
By Dan Grantham
