Sydney’s great stock stalemate

Stop Press: Nothing much is happening in the Sydney property market!

We’re never normally short of an action-packed news story. However, in the current climate, the biggest news is that there isn’t much action. Everything is at a standstill, causing buyers and vendors to tear their hair out.  

Buying property has been all about getting your foot on the ladder to purchase, build equity and sell your way up. But in reality, the property market relies on a natural lifecycle that’s more akin to a circle than a ladder.

Think about it like this; the apartment owner grows into the semi-detached, who grows into the freestanding home, who are ready to downsize into a townhouse. One move always relies on the other to ensure stock availability. 

Unfortunately, that’s not the case at the moment. Here’s what’s causing the stalemate. 

Mortgages have upsized for upsizers 

We’re all aware of the unprecedented rise in rates over the past 12 months and the havoc it’s wreaking on the property market. People who have outgrown their one or two-bed properties and looking for something bigger can no longer afford to borrow the difference between the sale of their property and the cost of buying something new. 

The lightning speed that rates increased has also been a problem. I’ve seen people have their budgets significantly reduced over the course of their search because they waited too long. Their pre-approved mortgage expired, and the banks reduced the amount they were willing to lend. That reduction can mean hundreds of thousands of dollars of difference in borrowing power, forcing a complete do-over of the search strategy. 

Downsizers have nowhere to downsize to

Those desirable freestanding homes with space to raise a family are few and far between. Empty nesters ready to move into something smaller and more manageable don’t have many options because the upsizers are staying put. 

Are you starting to see the problem with the cycle? 

The homes that do hit the market are capitalising on the demand and going for well above their worth at auction, a trend we’ve seen for years in Sydney, leaving many out of reach of the average buyer. 

Developers are developing duds

The one outlier to the market life cycle is property development, i.e. building new homes for people to upsize, downsize or enter the market. 

In an ideal world, development would be ahead of the growing demand. The problem we’re seeing across Sydney, however, is that developers aren’t building the kind of homes that people actually want to live in! Particularly empty nesters or downsizers are looking for well thought out, high level finished, low maintenance 2-3 bedroom properties, ideally without stairs or at least one bathroom and bedroom on the main floor. They want to be  close to amenities, and transport but also have off street parking. These can be apartments, townhouses or smaller Torrens Titled homes, but boy are they hard to find!! Developers much rather build the sky-high, high density apartment buildings knocked up without much thought for quality of living. It’s all about the money, money, money for them. 

So, with empty nesters staying put and young families unable to move up the ladder, what’s a prospective buyer to do?

Well, hope is not lost! The key in this tricky market is to have a clear plan, be patient and be ready to jump in with quick and confident decisions when you find the right property. Lining up your financing, inspections and everything else you need to seal the deal is crucial. Any delay and the opportunity will go away!

Many properties I’ve secured for clients wouldn’t have happened without our comprehensive discovery sessions. We take time to fully understand our clients' needs and wants, quickly narrowing the search and not wasting time when the right property pops up. 

At times like this, it pays to work with an expert who knows the market inside out and can also give you access to off-market opportunities. If you’d like some personalised advice, my team and I are always on hand to help.