According to economist Dr Shane Oliver, Sydney’s falling auction rate is a clear indication that the market has turned.
In AMP Capital’s weekly market update, chief economist Dr Shane Oliver noted that recent CoreLogic data showed a further decline in property prices in October.
“Auction clearance rates in Sydney are now falling towards levels around 55 per cent that are normally associated with price declines on an annual basis and we expect Sydney home prices to fall around 5-10 per cent over the next year or so,” Dr Oliver said.
CoreLogic’s latest figures, released this week, revealed that a clearance rate of 67.4 per cent was recorded, an increase from previous weeks.
However, Dr Oliver pointed to a long-term trend that might suggest that Sydney housing prices have passed their prime.
“Residential property prices in Sydney and Melbourne look to have peaked, with a slowdown likely in the next year or two,” Dr Oliver said.
The economist also noted that Sydney and Melbourne’s property market trends had not been replicated in the country’s other major cities.
“Across Australia, though, the picture is very mixed: Perth is showing signs of bottoming; Adelaide, Brisbane and Canberra are seeing moderate growth; Melbourne is cooling a bit; and Hobart is rising solidly,” Dr Oliver added.
He also predicted that the RBA will keep the cash rate at 1.5 per cent for the sixth consecutive month, partly attributing his prediction to a slowing housing market.
“The RBA’s forecasts for stronger growth, along with solid business conditions and employment growth, argue against rate cuts; but ongoing low inflation, record low wages growth, uncertainty around consumer spending, as highlighted by very weak retail sales, [are] signs that the housing cycle is slowing and the still strong [Australian dollar] argue against a rate hike.”