Monday , June 17 2019

Sydney’s housing slump to deepen as prices drop


The downturn in Sydney’s property market is set to deepen this year as tighter lending standards and the worst slump in values since the late 1980s cause nervous buyers to sit on the sidelines.
Average Sydney home values have fallen 11.1 percent since their 2017 peak, according to CoreLogic Inc. data — surpassing the 9.6 percent top-to-bottom decline when Australia was on the cusp of entering its last recession.
Nationwide, dwelling values declined 4.8 percent in 2018, marking the weakest housing market conditions since 2008, CoreLogic said.
“Access to finance is likely to remain the most significant barrier to an improvement in housing market conditions in 2019,” CoreLogic’s head of research Tim Lawless said.
Weak consumer sentiment towards the property market is “likely to continue to dampen housing demand.”
Sydney was the epicenter of a five-year boom and prices are still about 60 percent higher than they were in 2012.
That means few existing homeowners are underwater, and the major banks — which dominate about 80 percent of the mortgage market — have plenty of buffer before losses would bite.
Yet with some economists tipping a further 10 percent fall in prices in Australia’s most populous city, policy makers are growing nervous. The central bank is worried that a prolonged downturn will drag on consumption and warned last month that the major banks risked amplifying the slump if they all pulled back credit at the same time.
Australia’s prudential regulator last month announced it was dropping a cap on interest-only mortgage lending, loosening credit curbs that have contributed to the downturn.
“Without signs of a reprieve in the first quarter of 2019, authorities may roll out more measures to stabilise demand. While the risk of a rate cut by the Reserve Bank of Australia has increased, we think further easing can be avoided,” says Tamara Mast Henderson, Bloomberg Economics.
Across the country, house prices have now fallen 5.2 percent from their October 2017 peak.
Sydney led last year’s declines, with values dropping 8.9 percent, followed by a 7 percent fall in Melbourne, according to CoreLogic.
With elections expected in May, and the main opposition Labor party pledging to curb tax perks for property investors if it wins, confidence is likely to be hit further, Lawless said.

About Admin

Check Also

Hong Kong’s property shows signs of bubble

Bloomberg Noted economist and Harvard professor Carmen Reinhart has become the latest person to sound ...

Leave a Reply

Your email address will not be published. Required fields are marked *