Sydney’s slowing market could have a positive impact on the rest of the states as it eases pressure to restrict investor lending
Dwelling values may be dropping in Sydney, but the market as a whole remains stable. This is because regional areas are “still retaining some upside as the growth from Sydney filters out in a ‘halo effect’,” says Century 21 Australasia chairman and owner Charles Tarbey.
“According to CoreLogic, the softer conditions in Sydney are making a significant contribution to the flatter headline results for overall dwelling value growth,” he says.
Sydney’s effect on the national property market is unsurprising, considering the size of this market. The city alone comprises one fifth of national housing stock and accounts for a third of Australia’s property value.
“I advise vendors to ensure their expectations are aligned with these types of conditions, and some may need to adjust their pricing downwards as the number of buyers continues to reduce,” Tarbey says.
For OpenCorp director Matthew Lewison, however, Sydney’s influence on the overall market could be a good thing.
“Less investor activity and lower price growth in Sydney would release some pressure from APRA feeling the need to further impose on the investor lending market,” he says.
Furthermore, as the problem of affordability has already caused more and more people to leave Sydney for less expensive pastures, the reduction in values could turn Sydney’s status as a ‘net migration loser’ around.
Owner-occupiers dive in
With investors backing off as a result of the tight lending restrictions, first home buyers are finally getting their shot at the market.
“Affordable properties are
selling at a much faster pace now as first home buyers become more active in Sydney and Melbourne,” Lewison says.
Meanwhile, the Real Estate Institute of Australia indicates that the proportion of income required to make monthly loan payments has decreased slightly, which spells good news for homebuyers. Nonetheless, rental affordability remains an issue for tenants.
With land prices appearing to be peaking, demand for new housing may be reaching its ceiling as well; however, the resultant downturn is not expected to deal a significant blow, says BIS Oxford Economics’ Outlook for Residential Land 2017–2022 report.
“Off-the-plan purchases occurring in the current market, as well as low interest rates, will provide some support for lot production and land prices, as will a greater deficiency in the detached house market relative to the Sydney apartment market,” the report says.
SUBURB TO WATCH
TAREE: Bargain properties offer high yields
Situated on the mid North Coast of NSW, the suburb of Taree is very affordable, causing buyers to take notice.
The median house price is only $300,813 and the unit price just $207,259. This is coupled with excellent yields of 5.5% and 6.p% respectively, suggesting it would be worth investors taking a second look at Taree.
Growth trends in this suburb over the most recent five-year period show significant increases in values. Taree also benefits from a steady economy built on the agricultural sector and tourism.
Other drawcards include the number of public schools in town, such as Taree Public School and Chatham High School.
Education: Taree is the home of several public and private schools as well as universities
Growth: Taree has recorded consistent growth rates of up to 30% plus in the past five years
