14 Feb 2018
Sydney's housing market slows
Many analysts are expecting a 3 to 10 per cent drop for Sydney's market, while national prices remain high. Sydney's housing market has become the most significant drag on the headline growth figures, according to CoreLogic's Mr Tim Lawless. Sydney and Melbourne's unaffordable housing prices are widely considered to be among the top 10 in the world. Melbourne's prices have seen a 59 per cent increase since 2013. However, the rapid growth has slowed down significantly to merely 0.9 per cent last quarter. While most predict an imminent downturn, it is not clear whether it will be a fall or correction. However, an abrupt downturn can prove damaging to Australia's economy. Saul Eslake from the University of Tasmania believes that the Sydney market has reached its peak but does not foresee a large dip. He explains that many Australians have the means to withstand a drop in housing prices. It is not a surprise that there are now signs that the market has passed a turning point, he said. Australians have devoted $6.8 trillion to property, and have over $1.7 trillion bound in home loans. As such, Australia's debt-to-income ratio of 200 per cent is undoubtedly one of the highest globally. The increasing prices can be attributed to low interest and low unemployment rates, high immigration, shortages in housing, and overseas investors. Federal regulators recently implemented policies to prevent risky lending, which are proving to be effective. Mr Kevin Young, investor and owner of 200 properties, explained that the new circumstances made him sell a few of his properties. He reported that his bank changed his loan repayments from interest-only to traditional principal-plus-interest. How would you manage if your bank told you you had to pay 45 per cent more per month on your mortgage? he exclaimed. Last month, Scott Morrison observed that the curb has slowed Sydney and Melbourne's property investment, and suggests that their markets are fickle. With the slightest change to interest-only lending, we have seen Sydney house prices fall from double digits, from 15 per cent growth to 5 per cent in six months, said Morrison. That is with the slightest, scalpel-like change housing borrowing. More curbs will be introduced in the year, such as mandatory bank loans and detailed reporting of living expenses.
What the Australian construction industry is saying about Sydney Build...
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