Home sales numbers in Sydney continue to show remarkable growth while sales continue to stagnate across the country.
Recently, Core Logic released its monthly home value index. The most notable numbers reflected rising confidence in Sydney and the surrounding areas. Prices have risen 1.6 per cent, twice as much as elsewhere in the country. Melbourne’s expansion came close to Sydney’s at 1.4 per cent.
No other state or territorial capital came close to meeting the results seen in the two major cities. Population outflows in some other areas have contributed to keeping prices low.
August figures showed tremendous improvement in both Sydney and Melbourne after months of stagnation. Factors, however, could contribute to the cooling of real estate prices early next year.
Why Sales Have Jumped In Sydney
Back to back interest rates have primed the market for growth, making lending even more attractive than it has been in recent years. The Morrison Government’s policy of lowering income taxes has also spurred buyer confidence. Mortgage prices have dropped in many areas to levels not seen in six or seven decades.
Sydney property prices, in particular, have benefited from a year-long thinning of available and appropriate housing stock.
Higher-end houses saw a nearly two per cent increase in value while more affordable units saw a 0.4 per cent drop.
Experts warn that the spike could represent a temporary boost. Early 2020 should see a jump in the number of available moderate to high-end priced units.
Real Estate Reform and Post-Election Certainty
In addition to interest rate cuts, reform and the quieter political landscape have helped to create a sense of calm.
Implementing the Banking Royal Commission’s recommendations has also served as a stimulus. Regulations designed to create housing market stability after the downturn received criticism. Experts claimed that the lending requirements had tightened too much and had shut out many otherwise qualified home buyers. The industry also received the go-ahead to approve expedited pre approvals for first time home buyers.
The summer’s easing of lending restrictions has likely contributed to the spike in Sydney home sales.
Morrison’s May victory in national elections had also quieted fears of opposition proposals that could have upended efforts to restore consumer confidence.
First Time Home Buyers Struggle
Despite the incentives and improvements for most, first time home buyers in Sydney have continued to struggle. Most first time buyers need good price deals to entice them into the market and ensure that they can afford to buy. While government measures help, they have not yet made the process easier.
Additionally, rental stock in the region has seen a slight decline in prices while wages remain stagnant. First time home buyers’ relief may not come until the possible cooling of prices by additional stock next year.
Overall, however, the government’s various policies have helped Sydney and Melbourne climb out of the housing market’s collapse. Time will tell if the current positive trends continue to strengthen the industry or if the rebound is only temporary.