What’s everyone predicting for Sydney property?
If you’re following the commentary October was full of predictions for Sydney property, ‘downturn’ is a household word, and opinions are flying from all angles for 2019 and beyond.
So we thought we’d break down the main angles including who’s saying what, what’s being reported, and the debates across town. It might just scratch the surface. But here’s a start:
One Saturday dropped to around 30% clearance across Sydney this month and media labeled it an ‘all-time low’.
It’s only the 4th time in the history of charting auction results we’ve seen that happen here. The most recent dip was 2008 during the global financial crisis. Before that is was in 2004 when NSW introduced vendor stamp duty. And Boomers might remember it happening in 1989 when the cash rate hit 17%.
The why and what next?
This decade’s uncertainty comes after APRA moved to cool investor purchases, banks tightened their own lending standards, revelations are coming from the royal commission, and governments are cracking down on foreign investing.
And while this has certainly slowed things quickly, newly finished apartments continue to trickle into this market. Plus, Labor still supports plans to revise negative gearing and reduce capital gains tax concessions.
Given the recent state of politics (yes that Wentworth bi-election), is that theoretical now, or real forecasting?
Bet we’ll hear more on that.
But first, confusion
Another news story talked about the worst performing suburbs (by clearance rates) across all of Australia. Sydney took out the top 7 worst spots with 23% to 28% clearances in mostly outer suburbs from Miranda to Castle Hill to Parramatta to Kellyville.
At the same time, Sydney had 5 suburbs in Australia’s top 10 best performers. They were Bondi, Bronte, Rose Bay, Cremorne and Freshwater.
Sydney took out the top 10 ‘best’, and top 10 ‘worst’. And sellers and buyers wonder why everyone’s so misaligned…
Then our pollies weighed in
Even our Prime Minister has acknowledged the market correction.
He noted the soft landing, saying prices have been “running very hot” in Sydney. And Treasurer Josh Frydenberg echoed that sentiment saying it’s all “healthy for the economy“.
He added the coalition would need to carefully implement recommendations from the banking royal commission to ensure people can still access credit in a way that doesn’t harm the economy.
That’s expected around Jan/Feb 2019. Now that’s a space to watch.
On the other side
As the coalition used this glitch to tar the opposition’s potential negative gearing reforms, Labor was having none of that.
Shadow Treasurer Chris Bowen insists a slowdown allows reforms to “be implemented more smoothly” because so many investors have left the market.
He predicted investors would “roar back into the market” at some point and wanted to see the right policies adopted now to ensure “first-home buyers are on a more level playing field.”
More big prophecies
All eyes are on big banks and institutions for home price predictions. Right now, that tends to change from one announcement to the next.
QBE said the slump would continue until 2021. And they’d want to know. They’re one of the ones offering lender’s mortgage insurance. Chief economist at AMP Shane Oliver said he believed prices would continue to fall for another two years. Over at NAB, housing price forecasts for Sydney were cut for the second time in four months.
Stay tuned. Because that’s just October.