After a busier-than-normal holiday season, the real estate market is set to kick up  another gear this week with an influx of listings about to become available.

REINSW members report strong activity among vendors with many preparing to test  the market in February. Auctioneers have had the coming weekends booked since late  last year.

Clearance rates should begin the year in a strong position as there’s plenty of interest  from buyers, enquiry levels are high and even with more listings, there’s still a  fundamental undersupply of available homes.

As such, strong prices can still be expected, but there’s a need for vendors to  understand that the bulk of the growth in value has already been achieved. 
Sydney house prices surged by over $1000 a day on average last year and this is value  current vendors have already pocketed. Price increases may have moderated but the  good news is that they are holding firm.

Both buyers and vendors can have confidence in knowing where each other stands and  the onus is on agents to find the middle ground which acknowledges that peak growth  may have passed, but subdued growth is still a reasonable expectation.

The spotlight on the Reserve Bank will intensify in coming months, starting tomorrow,  as inflationary pressures contribute to the discussion around an interest rate rise. More  and more commentators are predicting a rate rise later in the year, which will most likely  further moderate price growth.

Nevertheless, as long as demand continues to outstrip supply, a correction is unlikely.  Consequently, we can expect the issue of affordability to remain unaddressed. More  supply is the only solution.

Tightening rental vacancy and increasing rents reinforce the point. While affordability  concerns persist, rental accommodation is in short supply and some regional markets  especially are unable to cope with increased demand.

According to CoreLogic, Sydney trails only Canberra in terms of average weekly rent at  $604. Private investors are the major source of rental accommodation and this sector  has been impacted significantly by the pandemic.

While investors may return in greater numbers in coming weeks after owner-occupiers  dominated transactions in 2021, the pure numbers suggest the lack of choice for renters  will continue, as the constrained supply of homes to rent and buy continues to bite.