With the Australian property market downturn finally slowing, Sydney house prices recorded a slight rise in June – an indicator that lower interest rates and improved buyer confidence are positively impacting housing market conditions in the city.
According to CoreLogic’s Hedonic Home Value Index for July 2019, Sydney house prices increased by 0.1% over the month, the first monthly increase since the market peak in July 2017. The Sydney City and Inner-South subregions performed particularly well over the quarter, recording a 1.3% gain in housing values.
Sydney property market forecast
Domain’s Property Price Forecast report for June 2019 predicts Sydney house and unit prices will increase by approximately 2% over the next six months. It’s expected that a modest turnaround will continue in 2020, In 2020, with Sydney property prices increasing by 3% to 5% over the year, and unit prices forecast to rise by 2% to 4%.
Even considering Sydney’s recent period of substantial price falls, median house and unit prices are currently 60% and 40% higher, respectively, than in 2012.
Improved auction clearance rates are also indicating a boost in buyer confidence. Clearance rates in Sydney are hovering at around 60%, which is the highest average in 15 months. Likewise, attendance at inspections has increased by 17% since the election.
Looking forward to 2020, low interest rates, stronger population growth and ongoing low unemployment (currently 4.5% NSW and even lower in Sydney) will support price growth. Home lending is also expected to grow at 2% a year due to a turnaround in sentiment and lower interest rates.
All these factors combined support a promising forecast for the Sydney property market.
What’s impacting Sydney house prices?
CoreLogic’s Head of Research, Tim Lawless, said in a statement that the outcome of the federal election, lower interest rates and relaxed lending rules are boosting the property market in Sydney and around Australia.
“Potentially we are seeing the first signs that the top end of Sydney and Melbourne’s housing markets are leading the recovery trend,” he said.
“The improvement in housing market conditions over the first five months of the year has largely been organic, however since mid-May there has been a raft of announcements that should provide a further positive flow through to housing demand.”
“Stability within the federal government, along with the removal of uncertainty surrounding changes to negative gearing and capital gains tax discounts, has brought about increased certainty and boosted confidence in the housing market.”
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