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A real estate arms race has been building across Sydney as brokers report a surge in hopeful home buyers seeking pre-approval for loans – a move set to crank up already elevated competition for properties.
New Loan Market Group data showed pre-approvals in many areas over the three months to October were double the levels recorded at the same time last year.
Experts said pre-approvals were a precursor to increased demand and signalled the market was about to hit another gear as a new wave of buyers stormed auctions and open for inspections.
This influx of buyers is expected to trigger bidding wars and sharp rises in prices, with housing supply remaining low and building activity yet to reach the pace needed to meet population growth.
Loan Market chief executive David McQueen said more people were fast tracking plans to buy a home because of interest rate cuts and changing market sentiment.
“There’s a definite shift,” he said, adding there was “rising interest across markets”.
Hurstville in Sydney’s south had the biggest rise in buyer demand, with pre-approvals for loans increasing 220 per cent annually.
Other areas with a notable rise in pre-approvals were northern beaches suburbs Manly and Dee Why, along with north shore suburbs Lavender Bay and North Sydney.
These increases have not been matched by any meaningful change in the number of homes available for sale in these areas.
This Panania home sold last week for $365k more than the price paid for the same place eights months ago. No renovation was done.
City sales are already firing. PropTrack data revealed prices across Greater Sydney are up 5 per cent from a year ago, but increases on certain properties have been substantially higher.
Last week a house in Panania in Sydney’s southwest sold for $1.94m – $375,000 higher than the price paid in February. The owners did not renovate.
To the east, a house on Lion St in Randwick changed hands this month for $1.2m more than the 2023 price – again, with no renovation.
A two-bedroom unit on nearby Market St sold earlier this month after a $100,000 renovation for $650,000 more than what the owner paid for it in November.
This Randwick house recently sold for $1.2m more than the price the vendor paid in 2023.
Agent Angus Gorrie of Ray White Eastern Beaches, part of the team who sold the Randwick homes, chalked the rises up to buyer fears of “missing out”.
Federal government initiatives aimed at helping first-home buyers, including this month’s expansion of the First Home Guarantee Scheme, had spooked much the market, Mr Gorrie said.
The scheme allows first-time buyers to use deposits of 2-5 per cent, without needing to pay pricey lender’s mortgage insurance, for purchases of up to $1.5 million.
“Everyone is terrified of how much the scheme will increase prices around them and they want to get in before it happens,” Mr Gorrie said.
“It means $1.3m houses are going for $1.4m and the sellers of those then buy their next house for $1.8m rather than $1.6m, and so there is a roll on effect across the market.”
Source: Loan Market Group.
AMP chief economist Shane Oliver recently commented in a podcast that arming first-home buyers with bigger budgets through the First Home Guarantee Scheme would simply drive up prices.
“Prices just goes up … It’s ridiculous,” he said.
Two Red Shoes broker Rebecca Jarrett-Dalton said the scheme was contributing to a renewed sense of buyer urgency.
“Even those not participating can see that the policy without anything to increase supply is going to drive house prices up,” she said.
Matt Triolo, with partner Marrietta and sons, Maxentius and Marcello, are selling their duplex in Sans Souci. Picture: Justin Lloyd
“All of the language from non-first home buyers is around avoiding the price rises.”
She added that housing supply couldn’t match buyer demand.
“While inquiries are at an all-time high, the big question is whether we will have enough stock to meet this demand,” she said.
“The market is incredibly hot, and this could lead to a highly competitive environment for buyers, with many homes selling for hundreds of thousands above their reserve.
“Buyers are needing to compromise faster and bid harder.”
Buyer competition has already been fierce at auctions this spring. Picture: Max Mason-Hubers
McGrath Sans Souci agent Bill Tsounias said many vendors were pulling their properties from auction only a week into their sales campaigns because they were getting lucrative private offers.
“You usually need a pretty high offer for sellers to do this,” he said. “Some units have more than 40 groups through the first open for inspection. It does depend on the property though.”
Recent home seekers have revealed their house searches were a grind.
Matt Triolo was recently on the hunt for a larger house in Sans Souci and said he had to register for 15 auctions before finally getting an offer accepted on a property.
Each registration cost money in conveyancers’ fees and building and pest inspection reports.
“I realised pretty quickly how much prices were going up,” he said. “It went pretty crazy.”
His previous home, a duplex on Napoleon St, is now up for auction later this month.
“I underestimated how hot the market was,” Mr Triolo said. “A lot of the properties I liked sold for about $500,000 more than I thought they would.”
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