Property reports from the tail-end of 2018 showed a continued cooling off period for the Sydney property market, in line with an aggregate yearly downturn of -4.93% on property values in Sydney, Melbourne, Brisbane, Adelaide, and Perth.
Prices on Sydney properties have now dropped 6.7% from their peak, and there is the potential for another 5% fall in the first half of 2019, according to realestate.com.au.
Whether the trend continues into the second half of the year or begins to correct itself depends on a number of factors, such as the outcome of the Banking Royal Commission and how it impacts the lending environment for buyers.
Some Sydney suburbs are weathering the storm better than others, with pricier areas like Manly and Paddington seeing some of the highest views per listing in NSW and even recording modest price growth. Cheaper suburbs like Kingswood and Richmond – popular areas for first homebuyers – are also on the rise despite lower overall demand.
REA Group chief economist Nerida Conisbee told ABC News that mid-priced suburbs are set to feel the housing price fall the hardest this year. "We are still seeing a pretty big drop in views per listing in Sydney," Conisbee said.
Right now, middle priced suburbs are suffering the most. And that impact in sentiment doesn't seem to be shifting."
Further abroad in NSW, many regional areas are performing. The Richmond-Tweed region has seen the highest price growth in NSW, and the fourth highest in Australia – thanks in part to the fast-growing appeal of the Byron Bay area. Byron Bay's median price now sits at $1.75 million (higher than most of Sydney), and nearby Brunswick Heads also has a $1.45 million median price tag. Other regions that did well over 2018 include Coffs Harbour-Grafton and Hunter Valley.
"I think there's a younger sea change element, because of the jobs growth occurring up there in manufacturing and small business growth,” Conisbee said.
"And Byron Bay is turning very Sydney-like in terms of its prices."
Despite the tough conditions, the property price decline does offer more opportunity to those looking to enter the property market. A doubling in Sydney housing values over the past decade was unsustainable, and many see the recent downturn as a positive trend for first homebuyers looking for affordable housing options.
CoreLogic’s head of research Tim Lawless told Smart Property Investment he predicts that we’ll see lower rates of interest-only lending, higher loan-to-value ratio lending, and higher debt-to-income ratio lending, sparking an increase in opportunities for owner-occupiers and first home buyers thanks to increased affordability.
“If you think about the market segment that's been most resilient, it's owner-occupiers,” Lawless said. We've seen a real upswing in first home buyer activity, and part of that is being fuelled by stamp duty concessions in New South Wales and Victoria.”
- What are typical Sydney house prices?
- Where are the best places to buy investment property in Sydney?
- What do I need to know about the Sydney property market?
Wondering how Sydney's changing property market could be affecting the price of your home? Get started with a free online property report from Upside to find out the value of your property.