Sydney housing tipped to fall further

The heated Sydney housing market could continue to lose steam, with values in the harbour city tipped to fall.

Robert and Lauren Skeen outside their sold Denistone East home, with children Kade, 13, Kingsley, 4, and Violet, 7. Picture: Hollie Adams

The heated Sydney housing market could continue to lose steam, with values in the harbour city tipped to fall noticeably in coming years after the most convincing evidence yet of a slowdown emerged.

The divergence between Sydney and Melbourne could also be set to continue, with Sydney home values falling last month after a stronger bull run over the past five years than in its southern counterpart.

Sydney dwelling values fell 0.1 per cent last month, according to CoreLogic data which, aside from a subtle fall in April, was Sydney’s first clear month-on-month decline after 17 months of consistent capital gains.

Melbourne values rose 0.9 per cent in the month, according to a CoreLogic survey. National values edged 0.2 per cent higher.

The figures come after values in Sydney soared more than 80 per cent and Melbourne rose more than 60 per cent in the past five years, meaning the slip in Sydney was coming from a “much higher base”, AMP Capital chief economist Shane Oliver said. Population growth was also stronger in Melbourne, he said.

 

“We’re probably entering a ­period of relative outperformance of Melbourne than Sydney. I think both will continue to soften but Melbourne will probably ­soften by less,” Mr Oliver said.

He expected dwelling values to fall by between 5 and 10 per cent over the next few years in both capitals. The figures came amid a regulatory crackdown on lending to ­investors and interest-only borrowers in a bid to take some heat out of the markets.

The clamps were “a really big part of the slowdown”, particularly in Sydney, CoreLogic head of research Tim Lawless said.

“The fact we are seeing more investment in the Sydney housing market than Melbourne — the tightening of lending conditions around interest-only and ­investment credit is having a much sharper effect on the Sydney market.”

Robert and Lauren Skeen and their four children sold their Sydney house in Denistone East about five weeks ago.

Mr Skeen, 48, said the property reached reserve quickly at auction and had more than doubled in value since they bought it in 2010. “I just knew it was for me a good time to sell, being in winter and the lack of supply and ­demand — and I thought coming into spring it was probably going to get worse,” he said.

Ray White North Ryde sales agent Jason Segon, who listed the home, said the area in Sydney’s north was still setting record ­prices. Ray White chairman Brian White noted a lift in listings coming into spring and welcomed continued low interest rates.

Melbourne buyer’s agent David Morrell said some September auctions “that should have gone off like a rocket” had failed to even attract a bid, a clear change from a few months ago.