Sydney house prices are up 30% – but is downside risk building?

By Grace Ormsby 03 November 2021 | 1 minute read

House values may still have moved up 1.5 per cent in October, but CoreLogic has highlighted that the market is starting to lose steam.

Sydney house prices

In the latest CoreLogic Hedonic Home Value Index, CoreLogic reported that while October’s value rise is in line with that of August and September, the growth rate is easing – down at 1.49 per cent compared to 1.51 per cent just a month earlier when taken out another decimal place.

CoreLogic’s research director, Tim Lawless, has argued that slowing growth conditions are a consequence of worsening housing affordability, rising supply levels, and less stimulus being on offer. 

And with housing prices continuing to outpace wages by a ratio of about 12:1, Mr Lawless said, “this is one of the reasons why first home buyers are becoming a progressively smaller component of housing demand”.

“New listings have surged by 47 per cent since the recent low in September and housing-focused stimulus such as HomeBuilder and stamp duty concessions have now expired. Combining these factors with the subtle tightening of credit assessments set for November 1, and it’s highly likely the housing market will continue to gradually lose momentum,” he flagged.

Even so, based on annual trends, pricing is still on its way up, thanks to strong growth conditions that peaked around March 2021.

Nationally, home values are up 21.6 per cent over the year to October, with half of Australia’s capital cities having recorded annual growth rates in excess of 20 per cent.

Regional Tasmania has been the biggest benefactor, reporting value hikes of 29.1 per cent over the 12 months.  

The research also highlighted the continuing two-speed market at play when it comes to houses vs units.

CoreLogic has noted that unit markets have generally continued to record a lower rate of growth relative to houses, and it’s most evident when looking at annual results and the bigger capital cities. 

In Sydney, house values are up a huge 30.4 per cent compared to a 13.6 per cent increase in unit values over the same period.

Down in Melbourne, it’s a similar story. House values rose 19.5 per cent over the year – despite its lengthy lockdowns  compared with a 9.2 per cent improvement on unit values. 

According to the research house, this trend is less evident across regional areas of Australia where the performance gap between houses and units is relatively small.

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Risk

Risk is defined as the possibility of an investment having a different outcome from its expected gains or returns.

About the author

Grace Ormsby

Grace Ormsby

Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and... Read more



Sydney house prices are up 30% – but is downside risk building?
Sydney house prices
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