The crowd at the Balgowlah auction last Saturday which saw a bungalow sell for $363,000 over its guide. (AAP IMAGE/Jordan Shields)

There is a huge shortage of houses on the well-heeled northern beaches with some agents saying the lack of supply is ‘critical’ and houses for sale are at their lowest level in 18 months.

Traditionally there are around 800 dwellings on the market at any one time. That figure has been as high as 1200 over the years, but this week it is a very low 564. That number includes off-the-plan units, retirement village units and land.

When it comes to houses for sale there are just 263 houses up for grabs, according to realestate.com.au.

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People at the onsite auction of a three-bedroom home last weekend on the beaches.

But houses are very much in demand as lending has eased, interest rates are at their lowest and now the Reserve Bank of Australia governor Dr Philip Lowe this week indicated rates may even go lower and that low interest rates are expected to remain low for the long term.

Add to that the normal winter slump when homeowners hold off listing their homes for sale and you have a supply and demand mismatch.

Real estate agents are calling the shortage “critical” saying more buyers are looking and family homes are particularly in demand. A surprising Federal Election result earlier this year, two back-to-back Reserve Bank official interest rate cuts and new buyers being able to borrow have also contributed to greater numbers of buyers looking.

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No. 146 Condamine St, Balgowlah had 180 inspections before auction.

Mark Bushell, of LJ Hooker Dee Why, said there was currently a critical shortage of houses on the market. Claudio Marcolongo, of LJ Hooker Avalon, said there was a shortage of houses below $2 million for sale and Tim Mumford, of Stone Real Estate, said the number of properties for sale on the northern beaches was at its lowest level in 18 months.

“Anything up to $1.5 million we are selling in a week and every second hand I am shaking is a new buyer we haven’t met before,” he said.

The market is now so strong vendors who couldn’t sell late last year are now relaunching in the hope of snagging both a sale and a strong price.

“This is the strongest winter in five years,” Mr Mumford said.

Four parties fought for the home.

A classic example of strong demand for a house was in Balgowlah last weekend.

A Californian bungalow in Balgowlah sold $363,000 above its guide as three young families and downsizers competed for the three-bedroom duplex. The single-storey home sold under the hammer for $1.613 million.

Florence Labadens, of Cunninghams Real Estate, said more than 180 inspections were made at the 1920s bungalow at 146 Condamine St, with buyers loving the northerly level backyard and proximity to shops and schools. The family who bought the period home had been looking for a house in the area for three years.

The Cunninghams team at the hot auction.

Ms Labadens said there was very little to choose from and many more buyers had confidence in the market.

“I think we will have a busier Spring this year and an early start to Spring as well, there are so many buyers out there,” she said.

Even busy Manly only has six houses on the market at the moment. This is exceptionally low for Manly but it may explain three recent strong house sales in the suburb. An older-style house in Bower St is believed to have sold for more than $7 million, a three-bedroom house in Iluka Ave sold at auction for $3,005,000, and a semi in Smith St sold before auction, for close to its advertised guide price of $2.5 million.

Jake Rowe, of Rowe Partners Real Estate, wouldn’t confirm the sale of number 7 Bower St but it is rumoured to have sold this week.

No. 8 Iluka Ave, Manly, a cottage on less than 400sqm of land, sold through Belle Property Manly for more than $3 million.

This Manly semi sold before auction for close to its $2.5 million guide.

And a semi at 35 Smith St, Manly found a buyer just before its scheduled auction. The renovated home, without onsite parking, was being sold by sobriety coach Rachel Hind so she could expand her private business.

Now that schools are back and the winter holidays are over first home buyers and upsizers are hoping more freestanding houses may come to market in the lead-up to Spring.