2019 has seen some big changes in the property market in Australia. Property favourites, Sydney and Melbourne seems to be going through a tough time with significant drops in home prices. It has been projected that the drop in prices is expected to continue in the near future. Does this mean that now is a good time to sell? Or buy? Let’s take a look at the numbers.
While it is well known that an array of suburbs in Sydney are renowned for being some of the highest-priced property locations in Australia, the recent fall in property prices has had the most impact in the middle-priced suburbs. The expensive suburbs have retained their value to a large extent. The prices of real estate in Sydney have fallen about 6.7% since its peak, and it is expected that it will witness a further 5% drop over the course of the next two years.
Comparatively, Melbourne’s property market is stronger than that of Sydney, while the problem of finance restrictions is the same in both the cities, job growth in Melbourne has ensured less of a drp than Sydney.
The reason behind the drop
It is natural to wonder why there has been such a significant drop in the house prices of the two most populated cities in Australia and it is important to recognise that lending conditions have played a pivotal role in this decline. The tight credit availability has made things difficult for buyers especially since The Australian Prudential Regulation Authority has tightened the terms of lending.
As a result developers have been struggling to ensure that all the apartments in their buildings are sold off, which is why many have had to sell their sites as well.
The expected change
As per many experts, the decline in prices has reached its peak. In February, there was a rise in the frequency of owner-occupier home loans by about 0.8%. Furthermore, it is expected that there might be some relaxation in the tight lending conditions, which would further alleviate the real estate market. It is also likely that the house building approvals are gearing towards the stage of peak decline.
However, the problem seems to be far from over. There are some tentative signs of improvement, and perhaps the market is starting to find some stability in the finances. It might be some time before the real estate market of Sydney and Melbourne starts to bloom again, and this negative trajectory of rates of houses disappears.
Our advice - speak to those in the know. Make contact with an agent and discuss the viability of selling and buying right now. They know best - and who knows - maybe know is your time to get on that ladder.