The north shore’s housing slump could be over by as early as the end of the year as a “perfect storm” of market forces lifts buyer demand and puts a floor underneath falling prices.
Housing experts pointed to three major changes poised to alter the direction of the market, which had been expected to only bottom out by mid-2020.
They included the Coalition’s unexpected win in the federal election last week, which has given renewed confidence to buyers and sellers anxious about Labor’s plans to cut negative gearing.
The Reserve Bank of Australia has also signalled an imminent cut to the cash rate, possibly in early June.
Such a cut would coincide with a push from financial regulators to end the current squeeze on credit.
The Australian Prudential Regulation Authority, the banking regulator, announced this week it would review a mix of stringent lending guidelines put in place when the market was booming.
Lifting these policies would allow owner occupier buyers to borrow about 9 per cent more and give more house hunters access to a loan.
CoreLogic head of research Tim Lawless said any one of these three developments on their own would be welcome news for buyers and sellers but together they would have a “material impact” on sales.
The property research group had earlier forecast a bottoming out in Sydney prices by the middle of next year, but that recovery was likely to occur sooner due to recent developments, Mr Lawless said.
“The market has become fundamentally different in just a week,” he said.
“The shadow of Labor’s negative gearing policies was hanging above sales for much of the year but a lot of confidence has returned to the market now that it’s gone. And markets survive on confidence.”
Preliminary figures suggested prices were continuing to fall at a slower pace than last year, Mr Lawless added.
“The downturn has been losing momentum since January and we’ve seen that continue this month,” he said.
Starr Partners chief executive Douglas Driscoll said the recent changes were “like all the stars aligning at once”.
“If this doesn’t trigger renewed demand from buyers I don’t know what will,” Mr Driscoll said.
“Buyers, particularly first home buyers, will be feeling like they have more wind in their sails … it will be a very different market by the end of the year.”
Belle Property Mosman principal Tim Foote said the local market will receive a boost off the back of business confidence.
“Mosman’s market is driven by business leaders, so the Liberals being returned will give them confidence and encourage further investment in their companies,” he said.
“Business success always translates to a rise in prestige property as people upgrade their family homes with new wealth.”
Chadwick Real Estate agent Lynette Malcolm said the phones have been ringing non-stop since the election.
“The level of uncertainty that has been prevented buyers and sellers from making a decision has been lifted,” she said.
“Now everyone is looking to get their home on the market before July school holidays or in spring and there is increased interest from buyers.”
My Housing Market analyst Andrew Wilson said an even bigger bounce in activity would probably come after August.
“We’re heading into winter, which is usually a quieter period for real estate, and the true test for the market will be after that,” Mr Wilson said.
Sydney’s median home price has fallen nearly 14 per cent since the market peaked in July 2017.