No need to catastrophise!
The Australian property market has been a hot topic of discussion lately, particularly as both the Liberal and Labor parties have been arguing about the effects negative gearing has on property prices, which has led some media commentators to speculate that the Australian property market is going to crash.
However, the property market isn’t going to crash. It’s currently softening in some markets and prices are correcting themselves, which is a normal part of the property cycle that helps safeguard the market — and, in turn, the economy — from a crash, which would push the country into a recession.
Realistically, Australia will probably see a reduction in property prices of as much as 7.5 percent, but that will be in areas where the supply of housing begins to outweigh the demand for it. Places like Western Australia, which saw an explosion in the demand for housing due to the mining boom, will start to see prices there ease, as the mining boom moves on.
What does this mean for the average Sydney homeowner?
Unlike Western Australia, though, housing in Sydney isn’t hitched to the mining boom — or any boom, in fact — and that means property is always in demand. Even during the GFC in 2008, which the Australian economy weathered exceptionally well, auction clearance rates in Sydney were still well above the average.
The greatest declines in auction clearance rates in Sydney were recorded following the GFC, between 2010 and 2012, when a number of measures, introduced by the government, to keep the real estate market from decline — such as the first home buyers grant and stamp duty exemptions on new homes — were wound back, which saw the number of young buyers in the market reduce substantially, and contributed to an overall drop in auction clearance rates.
Areas of Sydney where demand exceeds supply
In North Sydney and other North Shore suburbs such as Cammeray and Naremburn, through to Neutral Bay and Mosman, the problem wasn’t fewer first home buyers; it was the lack of stock. The buyers were there, but the properties weren’t. And that remains true today. The buyer demand for property on the Lower North Shore always outweighs the amount of stock that’s available for sale. Just 1 percent of properties on the Lower North Shore are currently coming on the market, which keeps property values strong.
Despite that, the Lower North Shore still has a 77 percent auction clearance rate, which is still above the state average, and just behind the City and Northern Beaches.
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