Very high housing inventory is bad for the housing market in the outer suburbs of Sydney. Experts say that both sellers and buyers should be wary that the high number of home for sale in these areas could actually decrease prices.
Decreasing home prices is not something new for Sydney anymore, according to Sydney Morning Herald, in the quarter ending December 2015, Sydney became the weakest performing capital city per CoreLogic data for having recorded 2.3 percent decrease in home prices. It was the worst quarter for the capital city since 2012. Many experts believe that the city will continue to see declining home prices.
Luckily, Sydney's auction market bounced back last weekend. As previously reported, Sydney's auction market reached its highest clearance last weekend at 72.5 percent, which is a big leap from the previous 43.3 percent but still a bit short from the 82.5 percent recorded over the same weekend last year. But the clearance rate was only high because the sales were mainly in the "inner city ring" areas, according to SQM Research managing director Louis Christopher.
According to the most recent report in Domain, Sydney's healthy auction clearance only masks that "two-speed" property market. It does not describe how auction markets are doing in the outer suburbs of Sydney. Mr Christopher said, "We were going to issue a warning about the listing levels in the southwest and Hills area, had we not seen the 70.2 per cent rate. There's a lot of stock in those areas ... at levels that could cause price falls. The levels are as high as they were in 2008."
According to the SQM Research headed by Louis Christopher the total listings in the Hills area at the end of January were 2252 dwellings. As Christopher had said, the auction clearance rate above 70 percent is not seen in areas like the Hills.