Sydney’s housing market will see flat or possibly falling prices this month, while Melbourne’s market continues to edge up, with values set to rise around half a per cent in August, according to CoreLogic.
In a preview of its revised monthly housing price index, CoreLogic said there had been no price growth in Sydney during August, as investors withdrew following higher mortgage rates on the back of the banking regulator’s crackdown.
Sydney’s almost unstoppable housing market was not immune to a downturn, head of research Tim Lawless said.
It was not however a precursor for any dramatic price correction.
“If you look back at any past cycle, you will find that prices do not fall off the cliff,” Mr Lawless said.
“We don’t think it would be disastrous, but it (Sydney housing values) could fall 5-10 per cent peak to trough,” Mr Lawless said following the launch in Sydney of CoreLogic’s updated housing value index.
“Sydney has been gradually cooling since November last year, auction clearance rates have starting slowing…all signs the market is cooling.”
“The question is what will be the difference between the peak and trough.”
He suggests by the end of this year, the pace of growth for Sydney and Melbourne could be neck and neck at 12.5-13 per cent in each city.
“Sydney’s market peaked at an annual growth rate of more than 19 per cent while Melbourne topped 15 per cent.
“In Melbourne, auction clearances were still topping 70 per cent, and investors were still active, unlike Sydney where investors had fallen away.
“Melbourne doesn’t have the affordability constraints of Sydney.
“The overall growth in Sydney’s values had been powered by the top end of the market while in Melbourne, more affordable housing had underpinned the market.
“Perth’s hard-hit housing market has seen a price fall of 1.5 per cent so far in this month.
“But the worst was likely behind the city as jobs growth improves in the state.
“Affordabitlity has been the silver lining … noting that first home buyers accounted for about 25 per cent of sales.
“In Brisbane, CoreLogic found housing values edged up only 0.2 per cent for the quarter with the market dragged down by a flood of new apartment construction.
“The poor perceptions around the city’s unit market was dampening the city’s whole housing sector with the market not reflecting improved immigration.”
Corelogic will reveal its new format hedonic index for August national house prices this Friday, which will see improved sampling, better handling of off the plan sales, along less volatility in daily and monthly readings.
The series goes back to 1980.
The new index will result in slight changes in trends so far this year as Sydney’s house prices rise in the year to July will be 10.9 per cent as opposed to 10.5 per cent under the old index.
Melbourne will be up 15.7 per cent compared to 12.4 per cent and Brisbane will be 13 per cent for the year, as opposed to 15.9 per cent.