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

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.