Worst of housing slump has passed as property price falls begin to slow

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Many Sydney homes are selling at discounted prices. This Mount Colah home was once listed for $1.1 million but was dropped to $890,000-$920,000.

Sydney’s housing slump has entered the history books with prices dropping by the biggest margin on record over the past 21 months – but an end to the downturn is on the horizon, experts claim.

Figures published today showed property prices were no longer falling as quickly as they once were, suggesting the ongoing correction in values was beginning to moderate.

The citywide median home price dropped 0.7 per cent over April – well below the 1.8 per cent drop recorded in December when the market slump was in full swing, the CoreLogic data showed.

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The April falls have meant the Sydney median home price, which sits at about $780,000, is 14.5 per cent lower than it was in July 2017 when prices first started falling – the biggest fall on record.

Sydney’s previous worst decline since CoreLogic began collecting data four decades ago was 9.6 per cent between 1989 and 1991.

The property group’s head of research Tim Lawless said prices would probably continue drifting lower for the rest of the year but the pace of further drops would not be as fast as they were previously.

“The data implies that housing market conditions may have moved through the worst of the downturn,” Mr Lawless said.

New housing construction is increasing Sydney’s housing supply. Picture: Toby Zerna

CoreLogic projected total peak-to-trough declines for Sydney home values would be 18-20 per cent, with prices likely bottoming out early next year.

There was a similar trend in Melbourne real estate, where prices were also down by a record margin since their peak, but beginning to flatten out.

The Victorian capital’s median dropped 0.6 per cent over April, well below the 1.5 per cent fall recorded over December.

This Berowra Heights home was first listed for $1.1 million but the vendors reduced the price to $950,000.

“There are more properties for sale, but the number of new listings is dropping,” Ms Conisbee said. “A lot of what’s available is old (stock).”

She added that fewer homeowners wanted to list their properties because they were not confident they would get the best price.

This was draining the supply of fresh listings in some suburbs, leaving house hunters to vie only for homes that had stayed on the market months without selling.

Auction clearance rates have begun to hold firm after being under 40 per cent last year. Picture: Tracey Nearmy

Melbourne values have fallen 10.9 per cent since their peak in September 2017, larger than the previous worst decline of 10 per cent between 1989 and 1992.

Moderation in price falls over April was the result of slightly improved mortgage activity, Mr Lawless said.

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Other green shoots for capital city housing markets included strengthening auction clearance rates, which have been hovering around the mid-50 per cent mark in recent weeks.

Weekly clearance rates were under 50 per cent in December.

This Nullaburra Rd home in Caringbah was listed with nearly a $200,000 discount off the original listed price.

Realestate.com.au chief economist Nerida Conisbee said fewer homeowners listing their properties for sale probably helped moderate price declines.

There are currently about 36,000 homes up for sale across Sydney, but the number of homeowners who have chosen to list within the past month has fallen by nearly 20 per cent.

“There are more properties for sale, but the number of new listings is dropping,” Ms Conisbee said. “A lot of what’s available is old (stock).”

She added that fewer homeowners wanted to list their properties because they were not confident they would get the best price.

Sydney price falls over the past 21 months were the biggest on record. Picture: Troy Snook

This was draining the supply of fresh listings in some suburbs, leaving house hunters to vie for homes that had been on the market months without selling.

Many of these homes were priced too high to sell or failed to tick the boxes of prospective buyers, Ms Conisbee said.

“Owners of the best homes are the least likely to sell,” she said. “Those who do list are often getting very good results because there are not of other (quality) homes available,” she said.

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