March Overview – February rate cut fails to make any impact on the March market.

Following the February rate cut, all eyes were watching the March property market to see if there was an immediate and noticeable shift in behaviour. The most evident impact that we identified was that more sellers were encouraged to bring their properties onto the market in the hope that the single rate cut would boost buyer confidence and improve the strength of offers. The net outcome was that the increased listings placed additional strain on prices as the already fickle buyer pool was further diluted. The Sydney auction clearance rate, which is often used to determine the strength of the market, continued to sputter along, with SQM Research showing the final clearance rate across the city pegged between 47 per cent and 49 per cent for the month.

When you’re meeting thousands of people weekly, you tend to get a pretty good read on what’s unfolding in the market. While it almost seems forbidden to talk about easing property prices in Sydney, the simple reality is that it does occur, but it doesn’t mean overall market conditions are poor. What we’re presently witnessing is a slightly newer level of behaviour, which is more based around many sellers being anchored to an unrealistic sale price. We get it though, it’s been a hard slog owning property since rates were jacked up 13 times from 2022. Add to this the cost-of-living shooting to the moon and most homeowners have been clinging onto a rate cut to solve a heap of financial pressure.

Across the market, we’ve spoken with top-tier agents from the East, Northern Beaches, North Shore, Hills District and across the Inner West and the behaviour patterns are identical, despite some of these markets having property prices with a few more zeros added. We’ve been trying to dissect what is currently unfolding. The prices we’re achieving reflect better outcomes than the crazy heights of the Covid 2021 and 2022 markets, so why are so many sellers unhappy with such outcomes? We can only surmise that many people increased their lifestyles when rates were at historic lows, buying the new house, car and holidays when the world opened up. But the data suggests that many have burnt through cash reserves and life has become tight, so the sale of their property in the incredibly resilient Sydney market can direct their cash flow into positive territory.

The problem is the fact that our buyer pool is largely made up of people experiencing the same affordability constraints, so the opportunity for ‘crazy’ money and a quickly rising market is simply not there. It’s a moderate market, evenly balanced and reasonable, and commercially realistic sellers are finding a path to a successful and happy outcome. It’s no market to roll the dice and test for a premium price – it’s for committed parties only. The market will require two, if not three, more rate cuts until there is price acceleration of any noticeable speed. So for now, we consider this an ideal time to jump into the market, be fair and reasonable, and a happy outcome can be found between buyers and sellers.