Sydney has recorded the fastest growth in median dwelling values over the three quarters to May, according to the latest market report from CoreLogic. Has the city already reached its peak?
The median dwelling value in the New South Wales capital rose by 9.3% over the three-month period to $970,355. The city also reported the highest quarterly growth in median housing value at 11% to $1.19m.
On a monthly basis, the median dwelling price in the city increased by 3%, the second highest gain next to Hobart's 3.2%. Compared to last year, Sydney's median dwelling value was 11.2% higher.
Grant Foley, director and buyer's agent at Grant Foley Property, said buyers are already wondering when prices in Sydney would start to fall. However, he said it is crucial to understand how the city's property market performed over the previous cycles to know how much growth is left.
"The previous peak of the Sydney market was about four years ago, in 2017, with dwelling prices only recently increasing above the level achieved back then," he said. "While many forecasters are suggesting at least another year of solid growth in Sydney, history may yet prove them wrong."
Foley said while many experts called the peak of the Sydney property market in 2014, prices continued rising for another three years.
Overall, Sydney's rising market cycle lasted for five years back then, with tightening lending restrictions a major reason why it ended.
Looking at the market segments in the city, it is the top end that has been driving a substantial proportion of the recent price growth in Sydney.
"But dwelling values in the lower quartile have increased a more modest 5% over the past quarter, which is a price level where far more buyers transact," Foley said.
While affordability constraints are moderating the number of first-home buyers in the market, it appears investors are taking the opportunity to reclaim their space.
In fact, the value of new loan commitments for investor housing increased by 12.7% in March. During the same month, first-home buyer commitments decreased by 3.1%.
"Savvy investors, on the other hand, are always less motivated by monetary handouts to buy new properties and have now returned to the market to purchase strategically located assets that offer sound cash flow and capital growth prospects," Foley said.
This trend, Foley said, could potentially dictate where prices are going for Sydney.
"It’s important for buyers to delve deeper into the data to understand how the current market cycle is working in practice," he said.
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