As the saying goes, what goes up must come down, and for the first time since 2012 Sydney has experienced a record drop in the median house price, signalling an end to three and a half years of growth.
Despite the first drop in the market since mid-2012, house prices in Sydney overall increased by 14.8 per cent in 2015 the Domain House Price Report has shown.
“The remarkable Sydney boom we’ve seen over the last three years is now clearly over, with the market unlikely to record any notable house prices growth until at least spring. While the median house price still remains above $1 million (at $1,013,258), if current trends continue it will likely fall below this benchmark by mid-year,” said Domain Senior Economist, Dr Andrew Wilson.
Sydney median house prices fell by a dramatic 3.1 per cent over the December quarter and the median unit prices also fell, dropping by 2.8 per cent to $655,845.
Melbourne and Canberra have emerged as the new growth leaders with both cities recording their highest growth since 2009. The Melbourne median house price increased by 1.8 per cent over the December quarter and Melbourne unit prices increased by 1.3 per cent.
Property owners in the nation’s capital would be pleased with the growth figures for median house prices while the median unit price fell by 2.2 per cent presumably due to the increase in new apartment construction that has pushed supply ahead of demand over the past year.
“A really good story in Canberra this quarter, with the local market continuing to rise after a subdued period of buyer activity. Canberra’s house price growth of 9.0 per cent over the year is behind only that of the Sydney and Melbourne markets and is the best local annual result since 2009,” said Dr Wilson.
Similarly, Adelaide, Hobart and Brisbane also recorded strong growth figures with their results attributed to improving local economies and restored market confidence across the nation.
“Even though Sydney, the traditional leader of the pack, has fallen behind in growth rates, the rest of the nation has seen some really strong figures over the last quarter. Home owners in some of our smaller cities such as Adelaide and Brisbane would have plenty to be pleased about and things in Hobart seemed to have picked up significantly with the city recording the highest annual result since 2009,” said Sally Tindall, Money Editor at RateCity.
It was a different story in Perth and Darwin this quarter with both cities continuing to feel the impact of the end of the mining boom and experiencing price drops. While Dr Wilson sites an oversupply of apartments in Darwin as an ongoing issue things are looking up for Perth this quarter with early signs suggesting that the rate of decline is moderating, as affordability improves and confidence recovers.
“Perth is a city to watch over the next quarter. Even though there has been sharp declines since the quieting of the resources boom the report suggests the decline may be curbing and eventual growth could be in sight,” said Tindall.