Sydney’s year-on-year house price growth has stalled to a 15-month low as a triple whammy of lending restrictions, increased building supply and first-home buyer concessions sparked price falls in pockets of the city.

The city’s median house price increased by just half a per cent over the December quarter, to $1,179,519, according to the latest Domain Group House Price report.

Meanwhile house prices in the inner west, lower north shore and northern beaches all dropped by more than 2 per cent.

“A number of factors drove that downward growth including fewer investor loans, increasing stock and greater competition,” said Domain Group data scientist Nicola Powell.

Dr Powell pointed to all three areas seeing a fall in price growth because there were fewer investors and an increase in housing supply.

“Particularly in the inner west, we’ve seen a 16 per cent increase of stock. There is greater competition when there are more vendors and as a result less demand from buyers,” Dr Powell said.

Queens Park resident Michaela Conomos and her husband held off buying last year despite wanting to upsize from their two-bedroom apartment now that their son is three years old.

She thinks now is the right time to buy as the market is showing signs of cooling.

“There was a little bit of uncertainty with buying last year, everyone was saying house prices were too high,” Mrs Conomos said.

“We feel a lot more confident that it will be a lot better this year with prices and stock availability.”

The city and eastern suburbs recorded a quarterly growth of 5.7 per cent, the median house price reaching $2,377,500. Yet the year-on-year increase of 2 per cent is the lowest level of annual increase since 2012, a sign that growth continued to slow down across the city.

Sydney’s unit prices decreased for a second consecutive quarter, bringing the median down to $736,879.

The lower north shore has gone from a vendor’s market to one where buyers wield more power, according to Belle Property real estate agent in Lindfield Geoff Dean.

“When the market was booming and going [from] strength to strength, people were panic buying without giving it a thought,” Mr Dean said.

“In a market where it was just going up by double figures [of capital growth] into 20 and 30 per cent annum clearly everything was selling. It’s now a balanced market.”

Rose & Jones buyer’s agent Lauren Goudy said people would not be making compromises on real estate purchases this year.

“With prices a bit more palatable there’s definitely more engagement from buyers who would otherwise be holding off. I think it’s a positive thing. People were spooked last year and now they’re taking a more considered approach,” she said.

“It’s not as impulsive as it was in the boom period, they’re being more strategic and so you’ve got to be a bit more picky. Not all properties will perform at the same level which is why you’re seeing parts of the inner west decline,” she said.

There were large swathes of Sydney, however, that recorded house price increases in the last quarter and in the year to December 2017 due to the highest level of first-home buyer participation rates, according to Dr Powell.

“I think we’re seeing the market diverge, those price points are starting to diverge too. We’re already seeing first-home buyers activated. The demand for entry-level houses  is increasing and at quite a dramatic rate,” she said.

It was mainly the fringes of the harbour city including western Sydney, central coast and the Blue Mountains that saw an increase of 6.9 per cent, 7.5 per cent and 4.6 per cent respectively.

The focus on construction in Sydney’s “commuter belt” has played a part in the increase of house prices, according to CBA senior economist Ryan Felsman.

“There’s going to be significant infrastructure developments in areas like Badgerys Creek and there will be better linkages and jobs growth with the airport – not only with construction phase but also the retail precinct,” he said.

These areas will continue to record strong growth as more people move out of the heart of Sydney to find more affordable housing and are willing to make the commute into work.

“The facilities and amenities are top notch and the government is focusing on improving transport with better linkages with trains, WestConnex and the M5 extension,” he said.

 

Click here to view the article written by Tawar Razaghi in Domain