The once-top performer could be entering a period of stagnation, as buyers simply cannot afford the market
With CoreLogic numbers showing price declines throughout Sydney since the latter part of 2017, the lack of growth is starting to affect investor perception.
“Weaker price growth means you’ve got fewer investors in the market because many go into the market with the expectation of capital gain – if they’re not seeing this, they start retreating from the market,” explains Angie Zigomanis, senior manager of residential property at BIS Oxford Economics.
“Sydney has a lot more exposure to investors – they make up a bigger part of the market compared to Melbourne, and so that drop-off in investor demand has had more impact on Sydney.”
Affordability is another factor stifling the demand for houses, given that the stamp duty concession for first home buyers is limited to $750,000. As a result, residents are leaving for greener – and lower-priced – pastures.
“Sydney is starting to have people leave the city for regional or interstate areas. It’s a net loss for Sydney, so it’s probably losing more population as well,” Zigomanis says.
Period of stagnation
With the majority of houses in the city being so high-priced, many first home buyers are turning to the apartment market.
“The stronger performance from the unit sector may suggest that buyer demand is becoming more concentrated in the mediumto high-density sector where entry prices are lower and commuting times are often more convenient when compared with the detached housing markets around the outer fringes of the city,” says Tim Lawless, head of research at CoreLogic.
However, he thinks the worst may already be over, noting that the rate of price drops has been easing since a fall of 3.9% back in July 2017.
“If the trend towards an improving rate of decline persists, the Sydney housing market may have already moved through its peak rate of decline,” Lawless says.
If that is the case, Sydney is primed to experience a period of stagnation as it regains its footing.
“When the Sydney market gets momentum it runs for a longer period than most of the other capital cities in Australia, but once that momentum runs out it can stagnate for longer periods too. This could be five to seven years,” says OpenCorp director Matthew Lewison.
SUBURB TO WATCH
ROSEMEADOW: Units pick up steam
A little over an hour from the Sydney CBD, the suburb of Rosemeadow enjoys access to a lively commercial centre that is home to Rosemeadow Marketplace, a community health centre and several schools.
John Therry Catholic High School is located here, along with Rosemeadow Public and Mary Brooksbank Special School. There are also numerous parks and reserves in the suburb, such as Demetrius Reserve and Rizal Park.
Rosemeadow can be accessed via Appin Road. Buses can take residents to the railway stations in Macarthur and Campbelltown, and some routes also stop at Appin and Wollongong.
Apartments are in great demand – prices rose by 10.6% in the 12 months to March 2018.
Amenities: Rosemeadow is served by a community centre and commercial centre.
Transport: The railway stations in Macarthur and Campbelltown can be reached by bus
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