By Poppy Johnston in Canberra
A dip in Sydney property prices will be welcomed by prospective homebuyers, with the city tipped to mimic Melbourne’s shallow downturn.
Home values in the harbourside city fell a very minor 0.1 per cent as price growth in high performing mid-sized capitals and the regions kept CoreLogic’s national index moving higher overall in October.
The 0.3 per cent lift in the national home value index marked 12 months of growth, but the pace has been slowing.
Heat is coming out of the rental market as well, in welcome reprieve for tenants and boding well for the inflation outlook.
The slowdown was particularly visible in apartments, with unit rents down in Sydney, Melbourne, Brisbane, Hobart and Canberra over the three months to late October.
CoreLogic’s research director Tim Lawless said the housing outlook was shifting.
As well as slower growth in home values, there was more stock on the market, providing home buyers with more choice.
“Total listings are now 13.2 per cent above the previous five-year average in Sydney and 13 per cent higher in Melbourne,” he said.
Greater choice and less urgency to buy could in part explain Sydney’s first monthly decline in nearly two years.
Sydney would likely follow a similar trajectory to Melbourne, which has been in a shallow correction – down less than two per cent over the year – as listing supply has improved, Mr Lawless told AAP.
Buyers hitting an affordability ceiling was also weighing on price growth, with Sydney experiencing a “spectacular growth phase” since the pandemic.
Stronger performance across the more affordable end of markets was evidence of buyer budgets reaching their limits.
Even Adelaide, Perth and Brisbane – which have been consistently high performers – were losing momentum.
Adelaide’s 1.1 per cent gain was the lowest monthly rise since June.
Brisbane’s 0.7 per cent lift was the weakest improvement since July.
A dip into the negative across the nationwide index was possible but Mr Lawless said the prospect of interest rate cuts early next year should keep a floor under prices.
The strong labour market and subdued outlook for new housing supply would further support property values.
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