Well, it has finally happened, Sydney house prices have come off the boil and have begun to cool.
With the announcement by the Domain Group, that Sydney’s median house price has fallen below $1 million after recording a second consecutive quarterly drop for the first time in five years, new data shows.
Over the March quarter, the harbour city’s median house price dropped 1.5 per cent to $995,804, with apartments slipping 0.7 per cent to $656,166, according to Domain Group’s March House Price Report released on Thursday.
This is a strong indicator that the Australian property boom has peaked and those who have recently purchased a property had probably wished they had waited just a little longer before committing to the deal. In fact the real problem with a falling market like this is not so much the stable home buyer but the speculator who had hoped the binge was going to go on for a bit longer.
With added pressure from lending institutions further falls are likely. Some banks are now imposing a 70% LVR, which is forcing the hands of the willing bidders of just a month or two back to remain in their pockets. If banks are forced to tighten their policies and pull in over extended borrowers, we could be seeing a dramatic decline in housing prices in over heated markets like Sydney and Melbourne.
Some home owners who have recently sold are hoping that the prices will continue in the downward trend, as they put their funds on ice and wait for the market to bottom out. Expecting to receive a windfall bargain, could be quite realistic as those in a position who are forced to sell, when there are few buyers around, are really at the mercy of the buyer.
Andrew Wilson of the Domain Group believes we are headed for a sustained period of negative growth in housing prices in Sydney but the fall should not be dramatic, due to the decamping of investors.