“Just shot themselves in the foot?”
Once again it is worth noting the comments made last quarter regarding the outlook,
“The outlook for the Sydney land market seems to be more of the same. This quarter it tried to push prices off the back of a pullback in production and drop in stock. It would appear that pricing is very much at the edge and if being honest overvalued.
Sydney estates have demonstrated for the past 2 years how to keep prices steady, this ability to steady the pricing ship has meant that it could maximise sales. It would be a brave Sydney estate that decides that it’s time to begin a second push.
As mentioned in the past Outlook, Sydney is still attracting its fair share of people from overseas. The supporting population fundamentals are still in place to underpin new land sales of 1,000 per month.
It was noted this survey that a lot of product being released went straight to builders (which under our survey is classified as a sale or allocation). The movement of product straight into builder channels may be a sign of market weakness or it could be a simple response to builders wanting to secure supply.
In summary, no signs of weakness for the Sydney market except for some bullish positioning regarding price. The market will need to keep price in check or it could just be that one too many mint.” Extract from Q4-2017 Report
I think what was stated has come about; the market has pushed prices again resulting in some serious cracks emerging. Similar to Melbourne, the Development industry must ensure it does not use supply or cost issues to justify over pricing relative to the housing market.
The outlook is for conditions to remain fragile due to;
- a) Builders becoming nervous around holding too much stock,
- b) strong push by smaller Developers for higher prices and a willingness to hold out for them
- c) Uncertainty around changing cost of development base