Sydney property prices stumble but expert says sellers shouldn't worry

Sydney residents walk past a newly-completed apartment development in Sydney's inner-city suburb of Zetland, June 24, 2015. Reuters/Jason Reed

Property prices have dropped over six percent in some parts of Sydney. Some experts say the five-year property boom here is coming to an end.

According to Fairfax Media, Sydney’s inner-city and eastern suburbs have taken the biggest hits as the property boom comes to an end, along with apartments on the lower north shore. The city’s median house price dropped 1.9 percent to $1,167,516 over the past three months, Domain revealed.

Prices in inner-city and in the eastern suburbs fell by a huge six percent to a median of $2.17 million. Meanwhile, north shore apartments have tumbled 6.7 percent. AMP Capital chief economist Shane Oliver has confirmed to the Sydney Morning Herald that Sydney market has “truly cooled.”

On the positive side, Oliver said he did not foresee a crash. However, prices might fall 10 percent.

But the downturn is inevitable after such strong price growth like what the city had seen over the past five years, according to Matthew Tiller, head of research at LJ Hooker. He added the market moves in cycles and “we’ve reached the top.”

Hooker said it is going to slow down. “There's a period of price moderation is inevitable after that, especially after the recent crackdown from APRA (Australian Prudential Regulation Authority), with some lending restrictions,” he added, according to news.com.au.

Hooker explained the reason Sydney’s inner-city and eastern suburbs have been hit is due to the high median price in the areas. “There’s a limited market once prices reach that level, and once you get an increase in listings, with more choice in the market, and you get a slowdown of buyers in that price category."

He said it should not cause worry to sellers because even though auction clearance rates have dropped, they remain between 65 and 70 percent. Hooker pointed out that there has been several buyers who have missed out over the past two or three years, and they are still sitting on the sidelines waiting for more choice to come into the market and for the heat to come out.

For Laing Real Estate in Potts Point managing director Vicky Laing, timing is an important factor. She said there will be a tightening in the market at particular times, like over school holidays and winter. She also recognised that demand for apartments remains very high in places like Marrickville and Randwick amid low demand in some suburbs.