Part 2 of a 2 Part Investigation
The low sales volumes that we have seen in 2008 have resulted from fear, necessity and pride. Each has played a role in reducing the number of sales.
In so much as fear has contributed people are always cautious during times of upheaval or unrest.
Economically it has been a minefield of a year with Sydney property prices generally being stable or heading south. The stock market has shed billions of dollars and nervous investors and even more nervous fund managers have either panicked or halted all activity to see where it would lead – we certainly have a good idea of that now.
As interest rates increased early in 2008 many people feared that the return of Labor to the Federal Government would bring devastatingly high interest rates and therefore chose not to buy – again they played a wait and see game.
Vendors, convinced that the economic bliss was sure to continue refused to accept lower prices from buyers and the number of unsold properties has increased as the year has gone on. The financial turmoil has seen companies tightening their belts and in some cases withdrawing benefits, bonuses and international transfers.
This has greatly affected the number of “Private Brokerage” level sales and has played havoc with the top end Luxury rental market. Without companies paying absurd amounts of money to house executives the demand for top end rentals has all but dried up – with Luxury Landlords accepting massive cuts in rental amounts, moving back into properties or simply leaving them empty (Not very smart in most cases).
The final and least understood factor that has resulted in decreased “Private Brokerage” level sales is the age old problem of pride. The uncertainty that the year has provided has caused many would be vendors to reconsider plans to sell in case they were seen by family, friends, colleagues and competitors as potentially having financial problems.
It has been reported in Sydney newspapers that journalists were waiting to see which Luxury Homes were put on the market as this may have been an indicator that a company or associated interest was struggling and in need of cash. It is amazing what people will do out of pride and emotion has played a huge part in the decreased sales volumes we have seen.
Fundamentally Sydney is well positioned. It has stunning natural beauty and there is a low rental vacancy rate and net immigration is quite high putting further demand on housing in the city. This should see the market steady and confidence return in 2009, however we cannot ignore the differences between average or low end property and Luxury “Private Brokerage” Sales.
Click on the link for PART 1