HOME seekers will only have until early next year to capitalise on falling prices and improved opportunities to get a bargain, a new report warns.
The current downturn would be temporary because next year’s Federal Election and the end of the banking royal commission would drive renewed demand for property, the research showed.
This would replace the current buyer’s market with a more balanced one, where sellers could be more insistent on their prices without harming their sale prospects.
Sydney’s median home price has already fallen by about 3.1 per cent over the past year and the total drop before prices lift again would likely be 10 per cent, the realestate.com.au Property Outlook report revealed.
MORE: Late bookmarker’s home a hot ticket
How one agent is worming himself into the market
Realestate.com.au’s chief economist Nerida Conisbee said a sustained drop or even a crash in home values was unlikely due to low unemployment.
The northern beaches and lower north shore remain in demand with buyers. Picture: AAP/ Troy Snook
But any return to growth next year would be more subdued and far below the double-digit annual increases that characterised the years from 2014-2017, Ms Conisbee said.
“Prices look set to continue to fall for the remainder of the year (but) the end of the royal commission and better economic growth for Australia next year will be a positive for the market,” she said.
Much of the current downturn was being driven by weaker activity from investors, who have been struggling to get financing from banks amid tighter regulations on financial institutions.
The median price of a home will likely drop by about 10 per cent throughout the downturn.
Other investors have been sitting out purchases until it becomes clear who will win the Federal election and they will likely re-enter the market at some point next year, Ms Conisbee said.
“Many investors have been pulling back from purchasers but will probably return to the market once there is more stability and both the election and royal commission wrap up,” she said.
Investors had largely dominated the Sydney real estate market during the boom of the last four years, accounting for nearly 60 per cent of property purchases in 2016 alone.
Freshwater is one of NSW’s most popular suburbs for buyers. Picture: Tom Watson/Droner
Their diminished presence was reflected in realestate.com.au research which showed demand for Sydney housing is currently 23 per cent lower than it was at this time last year.
Ms Conisbee said drops in demand were not evenly spread across the city and suburbs with higher levels of housing stock, such as in those in the Parramatta area and Hills district, were likely to record bigger falls in prices.
In contrast, harbour and inner city enclaves were still in high demand with buyers.
Neutral Bay on the north shore was Sydney’s most popular suburb for house seekers over the past three months, with Freshwater, Paddington, Cammeray and Como rounding out the top five.
Price performance is varying across houses and units.
The most popular suburbs for unit buyers were spread across the northern beaches and north shore and included McMahon’s Point, Fairlight, Queenscliff, Artarmon and Wollstonecraft and Naremburn.
Naremburn upsizer Matt Ware, who is selling his home at 20 Station St and looking for his next one, said he had noticed opportunities to get good value as a buyer were “patchy”.
“Some areas are holding firm or the prices are increasing, while in other areas you’re seeing the sellers drop their price expectations. It’s a little mixed,” Mr Ware said.
Belle Property’s David Benjafield said varying performance among areas was being influenced by housing stock levels.
“Houses in areas like the lower north shore are being tightly held,” he said. “There hasn’t been the jump in listings we were expecting because sellers are sitting on their hands waiting for the market to become more certain.”
MOST IN DEMAND SUBURBS IN SYDNEY
Neutral Bay, Freshwater, Paddington, Cammeray, Como
McMahons Point, Fairlight, Queenscliff, Artarmon, Wollstonecraft