Bargain hunters may only have until end of the year to get rock bottom price
Homebuyers keen to grab a bargain might want to think about splashing out soon, with new forecasts predicting Sydney’s property slump could be over by as early as the end of the year.
A “perfect storm” of market forces shoring up falling prices could bring an end to the strong buyer’s market currently in place.
Housing experts pointed to recent changes — such as a possible end to the current credit squeeze, a further cut in rates and certainty over the future of negative gearing — as altering the direction of the market, which had been expected to only bottom out by mid-2020.
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CoreLogic head of research Tim Lawless said there would be a “material impact” on sales.
“The market has become fundamentally different in just a week,” Mr Lawless said. “The shadow of Labor’s negative gearing policies was hanging above sales for much of the year but a lot of confidence has returned to the market now that it’s gone. And markets survive on confidence.”
Preliminary figures suggest prices were continuing to fall at a slower pace than last year, he said.
Sydney’s median home price has fallen nearly 14 per cent since the market peaked in July 2017, but much of the damage was done in 2018, Mr Lawless said.
“The downturn has been losing momentum since January and we’ve seen that continue this month,” he said.
Weekend auction results suggested some buyers were already responding to the changed conditions. The citywide clearance rate was 69.9 per cent with 505 of 697 auction results declared.
The clearance rate may drop as more results come in, but is poised to be the highest in almost a year, CoreLogic said.
Weekly clearance rates have hovered around the 55 per cent mark for most of the year.
Prominent auctioneer Damien Cooley said there was a feeling homeowners with plans to upsize or downsize could “breathe a sigh of relief”.
Many had been sitting on the fence not wanting to purchase because they were unsure of the impact Labor negative gearing reforms would have on house prices, Mr Cooley said.
“Buyers are bidding with a lot more confidence … there has been a visible change,” he said.
My Housing Market analyst Andrew Wilson said the true test for the market would come after August when the usually quiet winter period for sales ended.
Prices were unlikely to start growing again at a rapid rate like during the boom in 2015 and 2016, but buyers would become “more confident”, Mr Wilson added.
“There are still underlying factors likely to keep prices down for a while longer but the negatives for the market have gone,” he said.
“We will probably head into a flatter market where there is more of a balance (between buyers and sellers) and that will be healthy.”
Investorist founder Jon Ellis said there was a possibility Australia would benefit from the fallout of the US-China trade war.
“Some Chinese investors may be discouraged from US real estate investment, or college selection for their children, and choose the familiarity of (Australia).”