As widely predicted, the unrelenting heat in the Sydney property market has started to wane. A combination of tighter lending control measures introduced by APRA earlier in the year, along with extra restrictions and higher duties and land taxes for foreign investors, has seemingly had the desired effect, albeit a little faster than anticipated.
According to Corelogic, after Sydney property values surged almost 70% higher over the last 5 years, there was a -0.6% drop recorded over the last 3 months to October. An indication that tighter lending criteria, and a sharp increase in supply has helped the cool-off kick into gear.
Last weekend saw clearance rates sitting at 62%, which has since been adjusted to an icy 54% (compared to the 79% from this time last year) and while homes are still selling rapidly, the figure for ‘days on market’ has risen over recent months to an average of 36 days.
But, is it as bad as all the figures would have you believe?
A buyers market
After years of being a sellers’ market, it would appear that the tables are turning for Sydney. Or at least, balancing out a little.
In an interview with realestate.com, property mogul John McGrath said that “Sydney real estate had for too long been a tale of two markets — the best of times for sellers, the worst of times for buyers — but it now looks to be more stable and balanced”. He said the shift away from the ‘crazy’ prices of the past 5 years is providing a soft landing from the boom, and it appears the market is now ‘finally taking a breather’.
Whilst at face value this may come as bad news to some, it actually means that buyers who were previously priced out of a market fuelled by astronomic growth and fierce competition from rival bidders, will now have a better chance at getting their foot in the door. As for sellers’ (particularly those wanting to buy back into the market) they can now list their homes, with the confidence that they’ll be able to purchase again without prices continually ramping up.
Which is a good thing! With a market that for so long had been shrouded in the doom of an impending crash, and a frightening trajectory, its a welcome change.
A blessing in disguise?
The market that is emerging is one that will hopefully be more accessible, and most importantly, less volatile. With a reduction in property investor activity, first home buyers will hopefully find them selves with the chance for a much needed leg up, whilst the menacing ‘housing bubble’ set to burst, a seemingly distant, bad memory.
With rising unemployment and a weakening economy being attributed to nearly every market crash in recent history, experts are hopeful that we will avoid the dreaded 20-30 percent price falls, with a fast growing population keeping the demand for housing strong for years to come.
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