Rate hikes 'demolish' property boom
A leading economist has spoken out about the catastrophic effect APRA’s mortgage lending curbs have had on home buyer demand and property price growth.
The Domain House Price Report, released this week, confirmed that the “Sydney property boom of the past three years is over”, with a record drop in house prices in the harbour city over the three months to December last year.
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“The higher mortgage interest rates initiated mid-year by financial regulators for both investors and owner-occupiers have demolished the previous booming markets of Sydney and Melbourne, whilst house prices continued to fall in Perth and Darwin as a consequence of the slowdown in the mining sector,” Domain Group senior economist Andrew Wilson said.
“Other capital city markets, however, are now recording solid results, reflecting improving local economies and restored market confidence."
Sydney median house prices fell by 3.1 per cent over the December quarter – the first fall since June 2012 and the sharpest quarterly decline in house prices reported by the city on record, according to the report.
However, despite the record fall over the December quarter, Sydney house prices increased by 14.8 per cent over 2015.
Sydney’s median unit prices also fell steeply over the December quarter, dropping by 2.8 per cent to $655,845. This marks the first quarterly fall since March 2013 and the sharpest decline on record, according to the report. However across the year, Sydney unit prices also increased by 8.7 per cent.
“The remarkable Sydney boom we’ve seen over the last three years is now clearly over, with the market unlikely to record any notable house prices growth until at least spring,” Mr Wilson said.
“While the median house price still remains above $1 million (at $1,013,258), if current trends continue it will likely fall below this benchmark by mid-year,” he said.
The Melbourne median house price increased by 1.8 per cent over the December quarter, recording an annual growth of 14.5 per cent over 2015 – the highest annual result recorded by the city since the 2009 boom and reaching only 0.3 per cent behind Sydney.
Melbourne unit prices increased by 1.3 per cent over the December quarter to $446,046 for an annual increase of 2.4 per cent. The annual percentage growth was considerably below the previous year’s result of 5.2 per cent.
“It’s good news for Melbourne home owners, with the city recording its highest annual growth since 2009,” Mr Wilson said.
“While quarterly growth rates have weakened sharply, the end-of-year results remained positive as local supply and demand drivers remain robust.
“Melbourne recorded a median house price of $719,486 over the quarter to remain the second highest priced capital city housing market, behind Sydney,” he said.
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