We all know the media has been calling the end of the Sydney boom for some time and even falling prices BUT this does not accord fully with what we are seeing on the ground when we are out buying property for clients. It is true that in the December quarter of last year (2015) Sydney’s median house price fell by 1.6% cent according to Australian Bureau of Statistics data. However, the figures for the first quarter of 2016 are just in.
According to RP Data Core Logic, “Sydney saw a rise of 1% in March, from February, but the annual pace dropped to 7.4% from 9.5%. It touched a peak of 18.4% in July last year”. (Editor: Having a look at that, 7.4% is still quite respectable, since a rate of 7.2% yields a doubling in value in every 10 years).
“Overall, no indicators have emerged to suggest that dwelling values are starting to show sharp declines in any of the capital cities,” said RP Data head of research Tim Lawless. “We are likely to see Sydney and Melbourne dwelling values continue to rise, at least on average over 2016 and 2017, however growth rates are likely to be substantially lower than what has been recorded over previous years.”
The Reserve Bank of Australia’s governor, Glenn Stevens, gave credit for the reduction in price growth to regulatory measures introduced to slow lending to investors: “Some moderation in house prices in some of the locations where they had been rising most rapidly, while not the direct objective of the supervisory measures is…in my judgement helpful,” he said.
Sydney’s undersupply continues:
An analysis by ANZ Bank points out that the ongoing housing undersupply also limits the likelihood of price falls in the Sydney market.
BIS Shrapnel’s 2016 Building Industry Prospects report concluded that although Australia will have 24,000 extra homes by 2017, most of them will be in Victoria. The report also says that the undersupply of dwellings in Sydney is likely to continue for at least the next three or four years. It concluded that by 2017 Sydney will still see a shortage of 41,000 dwellings, representing only a slight improvement on the shortage of 53,386 this year.
So overall, in the first quarter 2016, Sydney prices continue to rise in the inner areas, albeit at a slower rate than the boom period of the last 3 years. There is still an undersupply of housing where people want to live. We are seeing a shortage of good quality listings and even though buyer demand has lessened to an extent, these factors have combined to put a floor under prices and even seen some price rises.
From our perspective as buyer’s agents we are having more success negotiating purchases before auction than this time last year and selling agents are offering us more off-market or pre-market opportunities. Our one main wish is for more quality listings to choose from, so our searches are taking a little more time. All the same, we suggest the time taken to find the right property will be well rewarded in the longer term.