Experts warn Sydney’s property market lull to last at least 2 years
20% dip in apartment prices in 2017 if interest rates increase
Although Macquarie forecast higher demand for Australian homes from expats after Brexit, property experts warn that at least in Sydney, the market lull would last for at least two years. Only Drummoyne showed conditions conducive to more price growth.
The Daily Telegraph reports that in other areas covering the city’s 700 suburbs, most logged drops in sales activity in comparison to 18 months ago, according to analysis. The Price Predictor Index of Hotspotting showed an increase in transactions in 70 suburbs at the beginning of 2015.
But chances of renewed growth in prices disappeared. Sales even in popular areas, such as Bankstown and Auburn, are very rare.
In late 2013, Auburn enjoyed over 200 sales per quarter which dipped to 75 in 2016. Similarly, Bankstown had 200 quarterly sales in the same period, but it went down to 80. In Haymarket, the drop was down to nine from 77 units.
Terry Ryder, director of Hotspotting, says softer conditions would case house prices to be placed on prolonged freeze. Ryder explains, “History shows booms run out of puff after three years and that’s what’s happening now.”
He adds one explanation behind the lesser interest in Sydney properties is buyers are more interested in homes in Brisbane and Adelaide where prices are more affordable. Ryder says only Blacktown, Camden and Campbelltown would likely be spared from the price downturn because of new infrastructure projects in these areas.
Across Australia, an increase in interest rate is predicted to smash the apartment market by 20 percent, warns AMP Capital. Dr Shane Oliver, chief economist of AMP Capital, says that in 2017, if interest rates would go up, there would be a fall in home prices by 10 percent and in units by 20 percent which would favour home buyers.
He attributes this to Australia’s property market moving toward a cyclical downturn in property prices, with the flat market being the more vulnerable.
VIDEO: 2016 Property Market Update and Outlook
