Sydney home prices may have sank by an average of nearly 10 per cent over the past year but sellers will remain in a strong position next year, according to the president of the Real Estate Institute of NSW.
REINSW’s Leanne Pilkington, who is also the managing director of real estate group Laing and Simmons, said recent falls in prices needed to be put into perspective.
Sydney’s median home price nearly doubled in between 2006 and 2017 to hit $1.18 million, making the falls insignificant in comparison, she said.
“The current price decline has reached 10 per cent and may yet fall a further 5-10 per cent, depending on who you listen to,” Ms Pilkington said.
“Either way, the historical growth in property prices over the last decade dwarfs the impact of the declines we’ve experienced in 2018.”
Falling transaction numbers also suggested fewer people were being impacted by the softer market than the headline numbers would suggest, Ms Pilkington added.
“Those affected by softer prices is a smaller proportion of the total market,” she said.
“It’s never ideal to see a decline in prices, but the nature of the cycle means there will always be peaks and troughs.”
She suggested tight lending restrictions from banks were restricting the number of people who were active in the market, creating pent up demand that would be released when banks softened their policies again.
The Australian Prudential Regulation Authority recent decision to loosen restrictions on interest-only loans could potentially raise “otherwise dormant investors from their sleep”, Ms Pilkington said.
“The number of people wanting to buy property remains high, and the next upturn in prices could come as early as next year.
“The first half of 2019 may just present some of the best conditions for property investors in some time. Labor has reconfirmed plans to remove negative gearing for future investments while grandfathering existing investments should it win Government, the odds of which are shortening.”
Ms Pilkington said the 2019 market could shape positively for upsizers too. “Even though people looking to upgrade may achieve a price less than they would have 12 months ago for their property, the gap to purchase a larger home in the current climate may well be smaller.”