Sydney prices to fall in 2018 as housing market turns
Is 2018 the year for first home buyers?
Sydney house prices will drop by 5 to 10 per cent this year as Australia’s property cycle will enter a downward phase.
The median price in Sydney fell 0.9 per cent over the month to $895,342, Melbourne was down 0.2 per cent to $720,417, Brisbane was flat on $491,391, Adelaide was up 0.2 per cent to $432,772, Perth fell 0.1 per cent to $463,886, Hobart was up 1.5 per cent to $403,800, Darwin fell 0.9 per cent to $424,901, while Canberra was up 0.2 per cent to $591,011.
The annual growth rate in the nation’s biggest housing market is now showing at 3.1 per cent, compared with the peak of the cycle seven months ago when values were rising at an annual rate of 17.1 per cent.
In 2017 we saw growth rates with national month-on-month capital gains and then slowing to zero per cent in October and November before turning negative in December.
The slow down has largely been affected by the banks following a crackdown on tighter lending polices with interest-only and investor lending by the Australian Prudential Regulation Authority.
2018’s housing market performance is likely to be extremely different to previous years. We are likely to see lower to negative growth rates across previously strong markets, more cautious buyers, investor activity and credit standards.
Weaker conditions mean mortgage interest rates are likely to remain low and the Reserve Bank is unlikely to raise the official cash rate any time soon, providing a positive lending environment for those able to secure credit.
House prices in Sydney have now fallen 2.2 per cent from their July high with houses seeing the bulk of the weakness in contrast to units.
Low interest rates and support for first home buyers are providing some support and should help ensure only moderate price falls. A property crash is unlikely in the absence of much higher interest rates and/or unemployment both of which are unlikely.
