Sydney property market update

Sydney’s Housing Market Update - released August 2016

Sydney property continued to grow in value during the last month, although at a slower pace than it was 12 months ago. Median home and unit values have dropped, as have rental yields, but real estate experts suggest that these changes are merely a market adjustment to more realistic levels of growth after a period of hyper-inflation.

Sydney dwelling values

Dwelling values in Sydney continue to rise, and even though these growth rates have halved when compared to last year's data, they are still higher than other state capitals across Australia. Sydney recorded a dwelling growth rate of 9.1% during July. Property sales numbers in Sydney have continued to decline over the last 12 months, with figures falling by 19.5% when compared to data from this time last year. However, Sydney is till outperforming with recording higher sales numbers than other Australian cities.

Sydney Property Market Update

Sydney Property Market Update

More property stock in the market

The number of listings is rising in Sydney as property takes longer to sell. With more stock available, there is greater selection for buyers. This market shift may see the market move towards buyers who will have increased bargaining power.

There was also an increase in Sydney auction clearance rates moving up to 80% in the last week of July, breaking through the 70% mark which has been the consistent figure over the last 4 months.

Home loans and interest rates

Property buyers are recommended to secure home loan finance now, before the incline of more buyers flood the property market.

While many lenders have reduced their interest rates, some have made credit policy tougher. Some lenders have advised us today that they will reduce the level of discounting on interest rates across the board for both owner occupiers and investors.

Key statistics for Sydney 

  • Median home values in Sydney have fallen from their peak in 2015
    • The dwelling average sits around $775,000, while the house median is at $880,000. Units hover around $670,000.
  • Rental yields declining for housing market
    • While the asking price of rents is declining in Sydney, along with gross rental yields, this appears to be predominately in the housing market, not units. The annual change in Sydney house rents is a drop of 0.1%. However, unit rents rose by 2.8%. As a result, the gross rental yield for Sydney hovers around 3.1%.
  • Selling time for property in Sydney is an average of 40 days, compared to just 26 days 12 months ago
  • Buyer discounts are around 5.4%, which is the same as this time last year
    • These figures suggest that, while homes are taking longer to sell, reasonable prices are still achievable, and that sellers are pricing their property realistically.

Sydney median property prices

Sydney Property Update - Median property prices

APRA changes to investors and lending

Over the last 12 months, the Australian Prudential Regulation Authority (APRA) have introduced a number of new regulations, including the 10% cap on the increase of new investment loans by lenders, the tightening of foreign investment and changes to home loan serviceability.

Sydney home loans

Sydney home loans

These moves have resulted in investor home loan growth falling to 5%, well below APRA's guideline. The value of investor home loans in New South Wales is lower than owner-occupier home loans. Investors currently hold a 43.5% share of the market, whereas owner-occupiers hold a 56.5% share.

Overall, the market is continuing to soften, with credit growth slowing. Australian home values are expected to decline further from 2015 peaks as the market readjusts after a period of substantial growth.

Total number of listings up 3.9% on last year

The total number of 'new property' listings in Sydney for the month of July is just under 5,700 dwellings. This figure was 26.9% lower than this time last year, while the 'total number' of listings in Sydney reached 18,861, which is 3.9% higher than this time last year.

All statistics are based on the latest CoreLogic data.

How the Sydney property market impacts your home loan

Keeping an eye on changes in the Sydney property market will keep you ahead of the trend. As the weather starts to warm up, we’re seeing an incline in listings, which suggests the market will start to become more competitive. These trends should act as a trigger to review your home loan options now and when lenders are promoting low home loan interest rates. 

To find out more about your home loan options, contact Mint Equity on 02 4340 4847.

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