Sydney Property Prices Fall for the First Time in Years

Sydney property bubble

A recent report coming out from CoreLogic shows that Sydney house prices have fallen for the first time since December 2015. Up to April the 27th, prices for a Sydney home fell by 0.1%. This fall is quite small however similar markets across the country fared a lot better such as Melbourne which recorded a 0.5% rise. However, this is half the growth experienced compared to March 2017 figures which saw a rise of 1% for the month showing a downward trend in price growth for the month of April.

It is predicted by SMH that prices may indeed end up falling by 0.2% for the month of April. What caused the fall for the month of April can be seen as a combination of seasonal factors & government policies. The seasonal factors at play were an Easter long-weekend which saw no property auctions taking place that week. This was followed by the ANZAC day long weekend which saw a massive reduction of properties up for auction as compared to the previous auction week.

Another factor at play is APRA cracking down on interest-only investor loans. This policy change may have taken some heat out of the residential investor sector. This included changes by the Big 4 banks to increase the interest rates on interest-only loans. The extra interest that would need to be paid could have possibly stopped people making the extra bid at auctions hence leading to a lower final price.

It was already noted that prices of Sydney housing were increasing faster than wages by a factor of 5 in 2016. Therefore one may interpret these results as a good sign considering prices were growing far too quickly for a stable market. The government & the policies it has introduced do not want prices to go backward, instead, they want moderate prices increases to match the inflation rate of rents. A rise in the order of 3% per year is far more sustainable for the economy & would eliminate a vast portion of speculator from the market.

Going forward, there is no telling where prices could go however it is important to note that prices in Sydney, in particular, are considered to be expensive.