From Mortgage Professional Australia. New report shows Sydney’s capital growth boom is over, economist says
A prominent economist believes a report released today confirms that Sydney’s house price boom has come to an end.
According to the latest Domain House Price Growth report, Sydney’s median house price grew by only 3.2% over the September quarter, the slowest rate of quarterly growth since March 2014.
According to the report the median price for a house in Sydney is $1,032,433, while the median unit price is now $673,182 after it grew at just 1.5% over the quarter – well down on the 7.4% growth seen during the June quarter.
“It’s still a good result for owners in Sydney, but I think it’s clear now that the boom in price growth we’ve been seeing is receding,” Domain Group senior economist Dr Andrew Wilson said.
“House price growth over the September quarter was well below what we saw in June, it’s actually less than half than the June quarter growth and it looks like growth will be lower again over the December quarter,” Dr Wilson said.
Dr Wilson said there have been a number of signs recently that have been pointing to slowdown in price growth.
“We’ve seen a sharp decline in auction clearance rates recently which is a pretty good forward indicator and also we’re starting to see interest rate increases that will offset any decreases by the RBA,” Dr Wilson said.
“Look, prices will continue to grow and it’s quite rational to say they will be higher this time next year, but it’s not going to be at the same level we’ve seen in recent years as a lot of the energy that came from the February and May rate cuts has now washed through the market and people simply don’t have the capacity to keep buying.”
In Melbourne, a similar slowing of capital growth rates appears to be occurring.
The Melbourne median house price increased by 2.8% over the September quarter, pushing the median house price above $700,000 for the first time, but that level of growth is well below the 6% recorded over then June quarter.
While investors can no longer expect the same strong levels of capital growth they have been experiencing in Sydney and Melbourne, Dr Wilson said there was also some worry for Brisbane, which has been touted by many as the next investment hotspot.
“Brisbane has been disappointing, it was predicted to grow just behind Melbourne but that’s just not happening.
“It’s doing nothing like it was predicted, growth looks like it could be below last year’s level and it’s just really going sideways with no direction or momentum.”
