Sydney and Melbourne Property market turn around

Sydney and Melbourne Property market turn around

Posted on September 19, 2019 by Mirren Property Investment

Rays of hope shine in the property market as Sydney and Melbourne turn around

While house prices have dropped in recent years, with small price rises in Sydney and Melbourne, there are now early signs that the housing market is on the path to recovery.

According to recent research by CoreLogic, over the three months to July 2019, the decrease in house prices is starting to smoothen, with no decline in values at all in July.

Sydney and Melbourne are driving this recovery of the housing property market, highlights Cameron Kusher, research analyst for CoreLogic.

“Early signs are emerging to suggest that the housing market has stabilised, however, this evidence is much more prevalent in capital cities than regional markets. The combined regional markets have seen the magnitude of declines trend higher throughout 2019,” Mr Kusher said.

“Movements in the Sydney and Melbourne markets are a good indication of what’s to come”, shared Eliza Owen, the research analyst at Domain.

“It doesn’t hold across all the cities, but generally we expect the high end of the market leads and provides an indication of what other markets can do in the future.”

While prices are on the rise in Sydney and Melbourne, some regional markets like Newcastle, the Gold Coast, Sunshine Coast, Illawarra, Lake Macquarie are still showing signs of a significant decline in house values, according to Mr Kusher.

“The reason for the declining regional values, and with little to no real signs of improvement, is more to do with the fact that most of the larger regional markets continue to record value falls,” he said.

“What is interesting is that some of the markets that have recorded significant value fall over recent years have actually recorded value increases over the past three months. Most of these are located in Queensland, Townsville, Cairns, Central Queensland and Mackay-Isaac-Whitsunday while Outback South Australia has seen the largest value increase over the three months despite values being more than 20% below their peak.”

Sydney and Melbourne finally get over the decline phase and show a turnaround with a slight increase over the past two months – 0.3% in Sydney and 0.4% in Melbourne.

“Over the coming months it will be interesting to see if the improvement continues and whether it spreads from Sydney and Melbourne to other capital cities and regional markets,” Mr Kusher said.

Next year looks more promising with a double-digit growth prediction.

Early next year, Melbourne and Sydney may be on a roll for double-digit price growth.

Since the Federal election in May, the improvements are being seen in Sydney and Melbourne, said Louis Christopher, managing director of SQM Research.

“I’m not ruling out a new housing boom,” Mr Christopher said.

We have low-interest rates and loosening of credit restrictions. I’m increasingly confident that we’re going to see double-digit growth in Sydney and Melbourne, even without another rate cut. In fact, I think we’re on track to see that happen by next year.”

Mr Kusher agrees that there are early signs of the housing market recovery.

“While there are clear signs of improving conditions, many point to the fact that the very low volume of sales in the market indicate that the recovery is not real or unsustainable.

“While that could very well prove to be true if/when stock levels rise, the truth of the matter is that in a downturn, sales volumes typically fall and subsequently, the early stages of a housing recovery are usually characterised by low volumes of sales.

“At this stage, the improving trend is quite real.”

According to Tim Lawless, CoreLogic’s Head of Research, the turnaround in housing conditions is being supported by a number of factors.

“Lower mortgage rates, improved access to credit, a boost in housing market confidence post the federal election and recent tax cuts are likely the primary drivers.”

Toughening of credit policies might prove a hindrance on price growth.

“Housing credit policies remain much tougher than they were prior to the Royal Commission as lenders continue to move away from the Household Expenditure Measure (HEM) and examine borrower spending behaviours and expenses more closely,” he said.

“Lenders now have the benefit of comprehensive credit reporting whereby borrower debt profiles are more transparent, providing lenders with the ability to assess creditworthiness in more detail.

“Lenders now have the benefit of comprehensive credit reporting whereby borrower debt profiles are more transparent, providing lenders with the ability to assess creditworthiness in more detail.


  • CoreLogic
  • Domain

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