“The quarterly falls in Sydney were pretty consistent across 2018 and if we keep seeing this consistency the median price could dip below $1 million,” she said.
Domain is majority owned by Nine, publisher of The Australian Financial Review.
Changing lending landscape
Since the royal commission into financial services, banks have tightened their lending practices and borrowers face increased scrutiny and delayed approval times as they try to justify household budgets and prove their ability to service a mortgage.
The share of investor home loans dropped to its lowest level in almost a decade, falling 22.6 per cent over the year to November – or 2.5 per cent over the month – new ABS figures show. Owner-occupier lending also suffered, down 1.4 per cent over the month.
“The biggest change to the market has been the lending landscape so if we see an interest rate cut or banks becoming less cautious on their lending, it could create a bit more buyer activity, which could aid its recovery,” Dr Powell said.
The general consensus among economists however is that the next move by the RBA will be to hike interest rates, which have now been on hold at 1.5 per cent since August 2016.
But a new year has brought renewed hope for some home owners who are now rushing to sell in early 2019.
“We started a lot of our campaigns on the weekend and our numbers through open homes are triple what we got at the end of last year,” Ercan Ersan, director at Ray White Surry Hills, said.
“Buyers have had time off, they have made new year’s resolutions and they want to get into the market,” he added.
Jasmine and Justin Clark listed their three-bedroom Federation cottage in Camperdown for sale last week and 10 contracts have already been issued after 42 groups inspected the home over the weekend.
“We know there’s been a drop in the market and we are keen to maximise what we can get,” Mrs Clark said.
While they hadn’t been planning to sell their home for very long, they jumped on the advice of agents to sell sooner rather than later and the timing coincided well with the start of a new school year.
“It has been our family home for almost 15 years, but with three young kids we want to be closer to their school and that’s not finishing any time soon so that’s why we are moving,” Mrs Clark said.
“I think in this first quarter we might see a bit of a spike in buyer activity and then it might plateau,” Mr Ersan said.
While he doesn’t expect prices to fall further, he said a possible federal election in May could temporarily stall the market. “Traditionally everyone presses pause around the election and for two or the three months after, which takes us deep into winter.”
Bigger price falls ahead
Several economists, however, expect property prices to fall further this year, including AMP Capital’s Shane Oliver who forecasts a further decline in Sydney and Melbourne of around 15 per cent.
Across the apartment market, Brisbane experienced the sharpest fall over the quarter, dropping 5 per cent, followed by a 3.6 per cent decline in Canberra and 3.3 per cent in Sydney.
“The Brisbane unit market is trying to find a balance, but heightened supply will be absorbed because we are seeing unit approvals, completions and those developments under construction all shrinking, which will help to support the recovery in that market,” Dr Powell said.
Adelaide was the only capital city where unit prices grew over the quarter, at 2.4 per cent.
“Adelaide seems to be more resilient compared to other cities, it’s bucked the downward trend, but the pace of growth is much lower compared to last year.”