Sydney property boom finally cools after fastest price rises since the 1980s

Sydney’s housing market has started to finally cool after a turbulent year that saw prices climb by an average of more than $800,000 in one region. See how prices changed in your area

Sydney’s housing market has started to finally cool after a turbulent year that saw prices climb by the fastest rate in more than 30 years.

Home prices continued to rise over the past month across most city regions, but by less than half the pace of increases earlier this year and analysts said pressure on buyers was beginning to ease.

Property price growth over October averaged 1.5 per cent, the slowest rate since January, when the industry was in shutdown for the summer holidays.

There is now an expectation growth in prices will slow in the months ahead or even grind to a halt in some city pockets next year.

The implication for home sellers was that listing down the track may not deliver a significantly higher price, while home buyers had less incentive to rush into purchases to lock in a lower price.

Vanessa Moule and Jarek Grygier with son Sebastian, are selling their Marrickville house at auction. Picture: Justin Lloyd.

Experts said part of the reason for the recent cooling was a major increase in listings, which gave home seekers more choice and thinned the competition at auctions.

The number of fresh listings increased more than 40 per cent over October – the third highest rise recorded in a month, according to SQM Research.

This increase was coupled with a drop in buyer demand as exhausted home seekers became priced out of much of the market.

The typical Sydney home is about $310,000 pricier than it was last year, while units were commanding prices about $100,000 higher, CoreLogic research showed.

Price hikes were even higher in coastal regions. Northern beaches house prices jumped a staggering 43 per cent over the year, dragging the median up $834,000 from $1.95 million last year to the current $2.78 million.

Prices in the Sutherland Shire climbed 38 per cent, or about $460,000, taking the median house value from $1.22 million last year to $1.68 million.

SQM Research director Louis Christopher said housing affordability, measured by the gap between prices and incomes, was at a similar level to previous peaks in the housing market.

There was still the possibility of further growth in prices, but the staggering rate at which values increased over the past year ruled out another major market spike next year, Ms Christopher said.

“House prices are particularly stretched and that means the market will be more susceptible to any type of action designed to tighten access to credit,” he said, adding this included a rise in interest rates.

Bidder numbers at auction have been dropping since lockdown ended. Picture: David Swift

CoreLogic head of research Eliza Owen said some lenders were already adjusting their loan products independently of the Reserve Bank and more could follow.

“Growth is slowing due to affordability constraints and bottoming out of mortgage rates, with a number of providers lifting those rates,” Ms Owen said.

Adrian Tsavalas, director of sales agency Adrian William, said boom conditions were being replaced by a more stable market.

“It’s starting to level out. It’s still a seller’s market but it feels like it’s becoming more of an even playing field,” he said.

“People are thinking there is more to life than property. During lockdown all that most people could spend their money on was online shopping or buying a house.

“Now they have more opportunities to spend their money, like eating out, going to the pub or travelling.”

Marrickville residents Jarek Grygier and Vanessa Moule said they deliberated about selling, but decided to put their Victoria Rd house up for auction next weekend knowing it was still a strong market.

“No one has a crystal ball,” Mr Grygier said. “It crossed our minds that prices could be higher next year, but it also wouldn’t surprise me if (they) don’t grow at the rate they have.

“Looking at how things have gone lately, there is still a lot of demand so we think things should go fairly well.”

Mr Grygier said the Marrickville area had become increasingly popular since they bought the house in 2014.

“We’re in a nice spot,” he said. “It’s close to parks, pubs and shops. We haven’t had to drive to go grocery shopping in six years.”