Sydney house prices slide another 0.7 per cent

By Su-Lin Tan on Dec 1, 2017

[AFR: Finance Review] Sydney's house prices continue its subtle downward slide falling another 0.7 per cent in November, the latest Corelogic data shows.

In the three months to November, Sydney house prices posted a 1.3 per cent fall, a reversal from the boom conditions that prevailed during the past five years, as investors continue to withdraw on the back of curtailed bank lending.

Melbourne was more resilient, thanks in part to strong population growth, rose 0.5 per cent growth in November.

But Perth stole the show. House prices in the western capital rose 0.2 per cent in November indicating a clear "bottoming out", Corelogic head of research Tim Lawless said.

"If this is indeed the start of a recovery phase in the Perth housing market, it comes after dwelling values have fallen 10.8 per cent since peaking in mid 2014," he said.

"And while the rate of value decline in Sydney has gathered some momentum, it remains extremely modest."

While the fall in Sydney comes as welcome relief to homebuyers, it won't be until March next year when steady market conditions return before a true "reading" can be made just as the current market heads into a seasonal end of year lull, Mr Lawless added.

So far however indicators show a continued softening in Sydney. Sydney's annual growth is now 5 percent, down from 7.7 percent the month before and almost 19 percent early in the year.

Auction clearances continue to fall to about 60 per cent compared to last year's 80 per cent range, but importantly, auction withdrawals have doubled year on year.

About 20 per cent of listed auctions last week were withdrawn compared to last year's 10 per cent as weak auction interests force sellers to take their sales private, according to Domain's APM. Melbourne on the other hand only had 3 per cent in withdrawals consistent over the year.

Overall, sales are still completing but they are taking longer and sellers' asking prices have come down about 5 to 10 per cent for some properties in Sydney, agents say.

A 10 per cent adjustment is still a healthy market, Mr Lawless said. Adjustments beyond 10 per cent would however constitute a "material" shift in the market but Mr Lawless said Sydney was unlikely to hit that point.

Prices of houses in Sydney posted a bigger fall of 1.1 per cent in November compared to apartment prices which rose 0.2 per cent.

For investors looking at Perth, not only has prices posted a small rise in November, in the three months to November, dwelling prices have maintained a positive rise of 0.3 per cent.

Settled sales were rising and homes were selling faster, Corelogic said. Properties were on the market for 59 days compared with 68 days a year ago.

Advertised stock levels have also fallen about 12.7 per cent compared with last year.

Melbourne has been the most steady market across the eastern seaboard. Clearances remained higher than Sydney in the 70 per cent range and auction volume and withdrawals in Melbourne remain steady year on year. Both house and apartment prices posted small gains in November.

In the year to date, Melbourne house prices have risen just over 10 per cent and Sydney rose 5 per cent.

Prices in the resurgent Tasmanian capital, Hobart climbed the most at 11.5 per cent in the year to November.