A big drop in Sydney house prices may be a reality in the near future. The price of houses in Australia has been increasingly high for quite some time now, but experts are predicting their eventual drop. The Domain House Price Report has concluded that the end of Sydney’s housing price boom was nigh, after the September period showed sharp declines in values.
Sydney house prices are growing at less than half the rate they were just three months prior to the report. In September, Sydney’s median house price was a record $1,032, 433. This new average is 3.2% more than it was in June, but works out to be a smaller growth, as its previous rate was 7.7%. This amount of growth is the lowest quarterly rate of growth since March of last year.
Sydney House Prices Declining
So why are things becoming slightly cheaper? For Sydney, it is to do with the amount of new housing developments. Tens of thousands of units, duplexes and homes have been built in the past few years, and new suburbs continue to be created and built to meet the wants of investors. One example is Green Square, where nearly 10,000 apartments will be built to meet investor demand. This is a fraction of the 213,000 new home starts across Australia. Goldman Sachs has warned that there will be an excess of housing by next year. They’ve also claimed that homes are overvalued by 20%, and that Australia has a one-in-three chance of recession before the end of 2017.
According to the Domain report, there has also been weak market activity in Brisbane and Adelaide, but Hobart and Canberra are the only cities that have had a spike in price. Perth has experienced consistent decline over the past three quarters, and house prices have dropped 2.4%. The report has also declared the end of Melbourne’s soaring housing prices.
“The recent strong capital city property markets of Melbourne and Sydney are now recording weaker price growth, with low interest rates – previously a key driver of the market – gradually losing impact,” says Dr Andrew Wilson, senior economist at Domain and author of the report.
It does look like within the next two years, the Sydney house prices will come down by 5-10%. This doesn’t mean you should go out and buy a house immediately. But keep an eye on the market to identify your ideal buying time.