The Fall in Sydney House Pricing
“House prices in Sydney fell last week. According to CoreLogic, prices fell by 0.2% in Sydney, leaving the decline over the past four weeks at 0.7%.” Business Insider.
From my personal experience, a similar property to our inner west unit we sold in February 2017 is achieving much lower results, as per the advice from our selling agent.
A big shift in the last 6 – 8 months. Good for you if you sold then. If you are selling now, my advice is to be prepared for the reality of where the market is at.
This story also comes through in the Auction clearance rates, which have reduced from 80-90% to 55-60% over the past 12-18 months.
The factors driving the fall:
- Reduced confidence in the market.
- More sellers, a lot less buyers, which results in less competition. This market dynamic also forces sellers who are after a relatively quick offload of their property, to also lower their price.
- The Independent Valuers are likely to be reducing their property valuations, taking a ‘better safe than sorry’ approach. Which means property valuations are coming in a lot shorter than they did 6 months ago. There is a sentiment of ‘protecting their reputation’ in the event that there is a future recession / GFC. Leaving a lot of speculation around what the ‘true valuation’ really is.
- Lending is difficult right now, whether you wish to buy property or refinance an existing loan. This means changes in servicing requirements, lower loan to value ratios and higher deposits required by buyers.
- Increases in unemployment will also affect prices in the short term. At this stage there is no new data around this, however the increasingly fragmented workplace may impact.
- Consumer Confidence is also a key indicator. According to ABC News (22 November 2017):
- Consumer confidence falls 1.7% to 99.7 meaning pessimists outnumber optimists.
- Almost a third of people plan to spend less this Christmas, only 11% plan to spend more.
- Views on household finances and the economy have deteriorated.