Spring time market
Spring is under way, marking the start of Sydney’s busiest property trading season.
Over the past five years, robust listings and strong auction clearances have set a high bar for the annual spring selling season, which has helped push the city’s property prices to record levels.
However, there are signs that relief for buyers could be coming, with data from real estate data provider CoreLogic showing an easing of prices in the harbour city, for the first time since 2015.
According to the figures, prices in Sydney fell 0.1 per cent in September, representing the first monthly decline reported in a staggering 17 months.
On a quarterly basis, prices nudged just 0.2 per cent higher, making it the weakest quarterly price rise since Sydney prices retreated in early 2016.
Auction clearance rates suggest the same trend. Sydney reported an auction clearance rate of 65.3 per cent on the first weekend in October, a fall from 76.6 per cent on the same weekend last year.
Housing affordability could be a factor
The price drop witnessed over September was driven by cooling demand for detached houses, according to CoreLogic’s head of research, Tim Lawless.
“Interestingly, across the Sydney housing market, it was the detached housing sector that pulled the monthly and quarterly growth rates lower,” he said.
“While unit values are also appreciating at a slower rate, detached housing values were 0.3 per cent lower over the month of September and 0.2 per cent lower over the quarter, while unit values recorded a subtle rise.”
A contributing factor, he said, was years of skyrocketing house prices pushing demand away from detached houses towards apartments, which were less expensive.
“Potentially the affordability challenges within the detached housing sector are pushing more demand towards the medium to high density sector, where, based on median values, houses are almost $290,000 more expensive than units.”
Still a good time to buy
Despite the shift towards apartments, AMP Capital chief economist Shane Oliver said a looming oversupply of units meant there were opportunities for smart buyers in the Sydney house market.
Mr Oliver especially urged investors in Sydney, where there were lots of cranes around, to “look at houses” at the moment.
“It’s a good time for those looking to upsize from a unit to a house to act, before the supply of units really hits and pushes down unit prices relative to house prices,” he said.
“Downsizers looking to shift from a house to a unit may be best to wait for the unit supply surge to hit, which will likely result in lower unit prices and more options.”
Legacy Property CEO Matthew Hyder agreed, saying demand remained strong for housing, especially in Sydney’s western suburbs.
“We see the strength in the Sydney property market continuing,” Mr Hyder said.
“We’re not seeing any easing in demand and confident of further growth even as younger buyers today find it a bit tougher to get a foothold in the market.”