As property prices continue to decline, people are wondering if it's the perfect time to enter the Sydney property market. While prices are still falling in most parts of the city, the rate of decline seems to be slowing, particularly in more affluent areas. Lending restrictions are also having an effect on property prices, as are interstate movements and housing supply levels. Whether or not it's a good time to buy depends greatly on where you want to call home, with the wider Sydney market expected to keep declining over 2019 but some suburbs and regional areas in NSW set to buck the trend.
Despite predictions for prices to keep falling this year, there could be a growing opportunity for people to strike in some suburbs while prices are low but stabilising. While dwelling values dropped by a massive 0.9 percent per month between December 2017 and January 2018, this rate was reduced to 0.6 percent in February 2018, and 0.3 percent in March 2018. In the latest figures from realestate.com.au’s quarterly Property Outlook report from December 2018, year-on-year figures were down 5.9 percent to a median figure of $840,000. While far from healthy, the price drop may not be as bad as first predicted.
According to Nerida Conisbee, realestate.com.au’s chief economist, "There is no doubt we are seeing price declines in Melbourne and Sydney, but they are not as pronounced as first thought, and we are certainly not seeing the worst conditions in 30 years." Ms Conisbee expects prices to keep falling, however, with the actual rate of decline widely dependent on the suburb and price of the property in question. According to the report, "middle priced suburbs" such as those in the Sutherland Shire have been the hardest hit so far at -8.9 percent over the year, followed by Parramatta at -8 percent, and Baulkham Hills and Hawkesbury at -7 percent.
According to Ms Conisbee, property prices are not the only factor to consider, with interest rates and a possible change in Federal Government also likely to change conditions on the ground: "At this stage, it is looking like restrictions on home loans will not be a big focus of the final royal commission. It is unlikely it will get any tougher for home buyers looking to borrow... It is now likely we will see a change of government sometime in the first half of 2019. While a more stable government is good news for property, it is the potential changes to negative gearing and capital gains concessions that could continue to lead to price falls.”
While affluent suburbs such as Freshwater, Paddington, and Dee Why may be able to buck the down-trend due to shear popularity, the wider Australian property market looks set to continue its fall. According to a research report released by Fitch Ratings, Australian house prices will decline a further 5 percent this year, which makes it the worst performer of 24 countries for the second consecutive year. In a worrying statistic, Australia now has a household debt-to-GDP ratio of 121 percent, which could be a big risk to the nation's economy if housing prices continue to slide.
While the agency didn't look into specific cities and regions in detail, it did say, "We expect price declines to continue at a similar pace in 2019 in Sydney and Melbourne, where larger falls have occurred." Even though "The most expensive quartile of properties has experienced the largest declines with falls of 9.5 percent [nationwide]," over the last year according to Fitch Ratings, affluent suburbs and sought after regional areas such as Byron Bay may be more insulated over the next couple of years if prices continue to stabilise.