Sydney Becomes Buyers' Market
Falling property prices signify a muted end to the booming Sydney market, with prices continuing to decline in key parts of the city. While the Reserve Bank has yet to make a move, banks seem cautious about the new conditions as they raise interest rates and initiate more cautious lending practices. Despite the decline, most people are expecting a mild decrease in prices over a lengthy period of time rather than a housing market crash. Some experts have already come out saying that Sydney is now a buyers' market, with the rate of decline seeming to stabilise over recent months as the amount of stock continues to grow.
Falling property prices have improved conditions for buyers, many of who have been locked out of the Sydney real estate market for way too long. The combination of low interest rates, falling prices, and healthy supply levels has helped to increase confidence among new home buyers and investors alike. According to Chris Richardson in the latest Deloitte Access Economics's latest business outlook, "housing prices are falling by over $1,000 a week" in the "house price fall we had to have."
Rather than a housing market crash, however, the rate of house price growth is fairly stable. According to data from CoreLogic, Sydney dwellings fell by a monthly rate of 0.9 percent at the start of the year, falling to 0.6 percent in February and 0.3 percent in March. The rate of decline has accelerated slightly since then, falling by 0.5 percent in July, 0.6 percent in September, and 0.74 percent in the most recent October results. Over the year, dwelling prices in Sydney have fallen 7.35 percent, with houses down 8.43 percent and units down 4.91 percent.
To put things into perspective, median dwelling prices in Sydney have increased by a massive 51 percent over the last five years. Since 2009, property prices in Sydney have increased by an almost unbelievable 105 percent. While the recent decline is significant, it really shouldn't be that surprising. According to Mr Richardson, recent declines are actually good news for the long-term health of the market: "Yes, they're falling but they're not falling at a dangerous rate and it's making them, shifting them, to safer territory... There are more falls to come, particularly in Sydney and Melbourne, because the prices there got silliest and you're seeing a range of pressures on it."
The combination of falling prices, low interest rates, and high stock levels has helped to favour buyers for the first time in ages, with an increase in unit supply over the next two years only likely to make things better. While the banks themselves are rising interest rates and getting more cautious about lending, there are growing opportunities for new buyers and investors to snap up a good deal. According to a study by realestate.com using data from CoreLogic, there's a growing number of locations in NSW where it's become cheaper to buy property than rent.
According to PK Property Buyers Agents director Peter Kelaher, falling prices continue to create opportunities for new buyers, especially for houses that need a little attention: “The best homes, those A-grade properties, will still be expensive, but if you’re willing to go for C-grade or D-grade homes, the ones that might need a bit of a renovation, you can get very good deals.” Along with being a good time to buy property, the growth in supply has also made it a good time to negotiate rents, something which can prove valuable for anyone who is saving for a deposit.
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