Is the Sydney property market starting to cool?
Auction results across the city over the Queen’s Birthday long weekend have provided even more evidence that the Sydney housing market is continuing to cool slightly from the soaring heights experienced at the end of 2016.
While the 407 properties up for auction last Saturday was a record for a Queen’s Birthday long weekend, the 67.1% clearance rate was the fourth weekend decline in a row according to data from Domain, and the lowest clearance rate since December 2015.
A total of just over $200 million worth of property was sold across the city at auction, with a median house price of $1.16 million - down from the median $1,314,000 price recorded the week before.
The weekend results in Sydney seem to support figures released last week by the Housing Industry Association (HIA) which showed that investment in housing is back down to a similar level to that of early 2016 with a 4.4% drop in investment in the March quarter.
One of the reasons behind the drop in clearance rates could be due to home loan providers lifting rates throughout 2017, as a result of APRA's new lending regulations that target interest only loans - typically favoured by investors. For instance, the Mozo database shows the average rate for an investor with an interest only loan this time six months ago was 4.69%, while it’s now jumped up to 5.00%.
But while growth in the market may have slowed in Sydney, the median house price still remains around record high levels - with the weekend’s median $1.16 million house price consistent with results from the March quarter which showed the median house price in Sydney of around $1.15 million.
The record median house price may be part of the reason why a newly released study from the Commonwealth Bank, titled the ‘Commbank Connected Future Report’, found that people in New South Wales were some of the least optimistic in the country when it came to their property dreams.
The study found people living in New South Wales (53%) and Victoria (54%) were the least optimistic in Australia, with younger Australians (57%) even more pessimistic about their housing prospects.
With more than a million responses, the study found that while the majority of Aussies think the Australian property dream has been ‘redefined’ (52%), there are many that think the dream is still alive (48%).
“While the Australian property dream looks markedly different in 2017, the majority of Australians either fully own or are paying off their home,” said the report's author, demographer Claire Madden.
“This has remained constant over the past five decades, so despite uncertainty, the Australian dream has clearly lived through time.”
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