Sydney’s median house price is estimated at $1,055,000 at June 2016, which is only 1% above a year earlier. A similar rise is forecast in 2016/17.
The median house price in Sydney over the three years to June 2019 is forecast to be 1% lower than in June 2016, a decline of 9% over the period.
The report added that the slowing price growth reflects strained affordability, and little potential for the stronger owner-occupier demand to push prices up further.
Chris Curtis, Managing Director of Curtis Associates said it was hard to generalise or characterise Sydney as one market.
He added: “The present reality is that turnover is slow and whilst listings are down this year, there is a spike in “off market” listings.
“However, most of those vendors are seeking premium prices, not just out of greed, but fear that unless they get a large sum of money, they will not be able to afford to buy close to the city.
“In my view, unemployment, population growth and interest rates will be the key drivers in the next 18 months. As long as interest rates stay low and supply stays tight, prices generally will be propped up, but not at the stunning rate of recent times as people really are at the limit of their borrowing capacity relative to income."
Rich Harvey, Managing Director of Propertybuyer, disagreed with the BIS report and said its estimate of Sydney’s median house price of $1,055,000 at June 2016, is significantly higher than other data sources and actually believes it will hit $1.1 million by 2019.
He added that NSW has the largest economy and a huge infrastructure pipeline with over $60 billion expected to be spent on projects over the next four years, while “there is unlikely to be any significant deterioration in the unemployment rate”.
Rich said: “I think most people would agree that Sydney house prices have experienced more than 1% growth in the last 12 months! There are three main reasons for this – population growth, employment and infrastructure projects.
“The reasons for the slowing market is affordability and lending constraints which are holding back the market.
“This is expected and it is positive to return to normal long term capital growth rates so the market doesn’t become overheated. Sydney tends to surge and then stagnate rather than having any dramatic drops.”
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