Property market ‘hard to call’ as prices buck trends of traditional downturn

Experts say falling house prices are bucking the trends associated with a traditional property downturn, making it difficult to predict where the market is headed.

Sydney couple Matt and Jen Sabin have had to readjust their budget several times over the past 12 months. Picture: John Feder/The Australian

Falling house prices are bucking the trends associated with a traditional property downturn and making it difficult to predict where the market is headed ­experts say.

Capital city prices are down 3.4 per cent from the peak on PropTrack’s measure this week, despite decade-low unemployment rates and rising consumer sentiment.

The nation also saw the busiest auctions week of the year this weekend with 2190 houses up for sale and a clearance rate of 62.5 per cent.

New figures from CoreLogic showed Melbourne auctions up 16.5 per cent and Sydney auctions up more than 10 per cent.

But interest rates have reduced the amount buyers can borrow and both rental and buying affordability each worsened last quarter, according to the Real Estate Institute of Australia.

Ray White chief economist Nerida Conisbee admitted she had trouble calculating the top and bottom of markets over the past few months.

“It is hard to call at the ­moment,” Ms Conisbee said.

“There is a lot going on at the moment which are positive and deterrent drivers.”

Reserve Bank governor Philip Lowe last week said more interest rate rises should be expected, adding a price fall of 10 per cent would “not be surprising”.

The rise in Westpac’s sentiment index of 4 per cent in September to 84 points included a 3.6 per cent increase in housing sentiment. But the bank’s chief economist, Bill Evans, warned that did not mean a rebound was likely in spring.

He expected prices would still fall about 12 per cent before finding the floor, but it would be more of an “unwinding” of growth rather than going through a “traditional” downturn.

“It’s not going to be a downturn like in the past because the labour market is so strong,” Mr Evans said. “It will be much more about the availability of credit and not so much about confidence.”

First-home buyers Matt and Jen Sabin are still looking to get into the market in Sydney’s inner west or inner south, near where they rent in ­Alexandria. They have been looking on and off for the past 12 months and hope to be successful at an upcoming auction.

“We had to readjust our budget several times and what we are willing to spend now is a lot less because of our borrowing ­capacity and just making sure that we have a built-in buffer,” Mr Sabin said.

Don’t try and time the market was Ms Conisbee’s advice to buyers. “The big thing now is looking long-term,” she said.

“Stick to your budget, being mindful that interest rates will rise. The reality is the moment to buy is when you find the right property because it might not be there when the market is right.”