Homely's 2014 Market Recap….and our bold predictions for 2015.


So 2014 has nearly come and gone, and such is the case with the real estate industry, there have been very few dull moments. The year has ebbed and flowed, but all in all been overwhelmingly positive for sellers and proven to be another challenge for buyers to crack in to the market due to strong investor interest and notoriously low interest rates, some of the lowest on record.

2014 saw interest rates hover around the 3/4/5% level which for investors made the cost of money notoriously cheap and easily accessible. With many investors being 'Baby Boomers' people that are looking at their superannuation and have seen the cost of money rise as high as 18-20% the attraction to utilise the banks money was just too good to refuse.

The energy among buyers was particularly evident early on in the year. Leading into the Easter weekend period and for the three consecutive weekends their were record auction numbers nationally. Sydney was particularly strong with more than 1,000 auctions per weekend and a clearance rate consistently around 80%. 

After a very strong Easter, there was a two week lull due to the holidays and the Anzac Day long weekend, with buyers obviously frustrated by the lack of quality stock. More listings came onto the market in May, June and July and while the volume of sales was high, the market eased slightly. 

The 2014 market will end a remarkable year of real estate nationally, however there is no doubt the market has cooled slightly due to the surge in stock in October and particularly November; as well as the inevitable impact of another strong year of price growth giving buyers pause for thought.

CLEARANCE RATES

Clearance rates have remained incredibly strong throughout the year as property has been snapped up by hungry buyers. Melbourne clearance rates hovered around 75% for the year and for Sydney it hasn't been unusual to see clearance rates pushing past 80% with constant reports every Monday morning filling inboxes about two property crazed buyers pushing a home's reserve $200,000, $300,000 above reserve. However since Melbourne Cup, the national average has fallen and continued to stumble. There was a national clearance rate around 71% the week after Melbourne cup, the lowest since July after Melbourne Cup. The most recent month has seen a national, price fall of 0.3 per cent and clearance rates just above 70% for Sydney and around 65% for Melbourne. 

ECONOMIC SLOW DOWN

Jobless data from the ABS reports that the national unemployment rate remained fixed at 6.2 per cent in October; the highest level since March 2003. The Victorian unemployment rate remains at 6.8 per cent. With these figures and job uncertainty, it is unlikely to see a strong drive in the market from home buyers, with investors left to do most of the buying, trying to secure good returns off their investments. The more unemployment rises and uncertainty continues, expect to see the market to take a hit because of it. 

STOCK LEVELS UNBELIEVABLY HIGH

Buyers have been favoured to some extent by an abundance of stock on the market, however soaring November auction volumes haven't resulted in unprecedented clearance rates. It seems vendors still have  a firm price in mind that they expect to get for their homes, and irrespective of the stock on the market, they still believe they should be getting top dollar. This is creating a lot of tension in the market due to buyers wanting value and sellers wanting top dollar. If this continues, and interest rates, expect vendors to have to readjust and change their expectations to a lower level.

SOME MARKETS HAVE DEFIED LOGIC

Regardless of the slow down in the past few weeks, auction clearance rates nationally were at 68%. Sydney led the way with an average of 72%, well below the October average of 80%. Adelaide was second highest at 68%, pipping Melbourne at 67%. 

Auction Services recorded a clearance rate of 76% in November. Auction Services Directors, Rocky Bartolotto and Scott Dalton say strong results are still being achieved but the market has now shifted to favour buyers, with competition spread a little more thinly across a significant amount of new stock. As a result, vendors should consider this on auction day if their reserve price is not met.  

Truly remarkable results continue to surprise, with the best one this month from Joe Bechara of LJ Hooker Granville and Auction Services Director and Auctioneer, Rob Trovato delivering a sale that was $1.208 million over reserve! The property, at 32 South Street, Granville, sold for $2.608 million.

WHERE TO FOR 2015?

2015 looks from the outset that it may not have the pizazz that 2014 provided, especially early on. There looks to be more of a subdued forecast for the year ahead for a few reasons. Interest rates are most likely going to rise at some stage in the next 12 months, unemployment may continue to grow and people will start to become more cautious. The AUD looks to be settled but if anything it may head downwards throughout the year, making foreign investment in to Australia more appealing, locking out local investment and making people more conservative. Expect 2015 to not break any records, it will be near on impossible to match the heat in the market that 2014 showed at some stages with 1,000 plus auctions a week and an infinite pool of buyers to match it. Whatever happens, we'll be here to keep you updated.     

About the Authors:

Todd Schulberg

Todd Schulberg handles all things marketing for Homely.com.au - Living and breathing property, Todd has a keen interest in the movements in the market and how agents can utilise new tools and technology in order to be more connected. Using all things social, Todd suggests different ways that agents can engage and think outside the square with their marketing approach. 

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Rocky Bartolotto

Rocky Bartolotto is the National Sales Director for Homely.com.au - Rocky's extensive experience in introducing new product offerings to the market and client management abilities makes him one of the most knowledgeable property specialists in the country. 

In addition to his time working in the online space, Bartolotto is also one of Sydney’s top auctioneers, with over 4000 auctions performed through his business Auction Services.

is the National Sales Director for Homely.com.au - Rocky's extensive experience in introducing new product offerings to the market and client management abilities makes him one of the most knowledgeable property specialists in the country. 

In addition to his time working in the online space, Bartolotto is also one of Sydney’s top auctioneers, with over 4000 auctions performed through his business Auction Services.

rocky round.png

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