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Sydneysiders expect property prices will keep on falling, but hope the removal of stamp duty will turn things around

Jack Derwin
  • Sentiment has turned on Sydney's property market, according to the latest survey from the Urban Development Institute of Australia (UDIA).
  • The percentage of residents expecting price falls in the next six months has doubled from last year.
  • Buyers have also been driven out of the market, with three in four residents saying they're totally unlikely to purchase a property.
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Australians have always had a torrid love affair with real estate, but it's currently looking to be plumbing new emotional lows in the harbourside city.

One in two Sydneysiders expects prices to fall over the next six months, more than double last year's group, according to the latest report by the Urban Development Institute of Australia (UDIA) and development consultant Urbis.

Three in four, meanwhile, rated their chances of buying in the next six months as totally unlikely. But the pessimism which has entered the real estate market could be short-lived.

"Residents appear to view the impacts on property prices as a short term thing," Urbis associate director Kylie Newcomb told media this week.

"Half believe prices will actually be lower in six months time, but 63% are expecting that prices will be even higher in 18 months."

It's an unsurprising result considering even the country's biggest bank was expecting falls as sharp as 10%. But while few outside the market will commiserate the city's $1 million median house price taking a hit, it does show the impact Australians expect the recession will have.

Clearly, it's divided all segments of the market. A reduced majority of 52% of residents still rate now as a good time to buy. Investors are nearly as twice as negative as owner-occupiers, reflected in a major downturn in lending activity.

It's also clearly split the true believers from the merely interested, with casual browsers deciding to put off their search until there is more certainty.

Among those who remain in the market, Parramatta, Castle Hill, Chatswood, Blacktown, and Balmain remain the most popular suburbs.

Interestingly, the removal of stamp duty could be a possible remedy for the dour outlook. With the New South Wales government considering ditching the controversial tax, one in three want it gone altogether.

"[Meanwhile] more than half of all residents... believe changes to stamp duty will give them confidence in the property market," UDIA NSW chief executive Steve Mann said.

Having been lauded by economists as a $17 billion stimulus measure if scrapped nationwide, it could be enough to turn the market around once again.