Homeowners have been urged not to panic sell in response to news that the Sydney property market has contracted for the first time in almost two years.
On Monday, property researcher CoreLogic revealed that while average house prices across Australia continued to rise in September, in the nation’s most populous city they fell by 0.1 per cent.
It was the first time the Sydney market saw negative growth since late 2015. Melbourne, meanwhile, continued to close in on Sydney with growth of 0.9 per cent.
The figures provided the most dramatic evidence yet that the Sydney property market’s extraordinary run may well be over – and, more, that it could be on the way down again.
If this is the case, Sydney homeowners apparently face a choice: sell now, or risk losing out.
But that, according to prominent property expert and CEO of Empire consultancy Chris Gray, is not the way to think about it.
He told The New Daily that the reality of the situation was not reflected in the headline figures, and that the worst thing homeowners could do was to panic sell.
“Don’t panic, and get the right advice. Try to look at the numbers, and not the emotions, because quite often the numbers tell you something different,” he said.
He urged those considering selling a property to invest in some independent accountancy advice and a property evaluation before making the call to sell, and then spend time finding the right real estate agent to handle the sale.
“You really need to find a trusted real estate agent. Most will just say ‘yes, sell it now’, because they have an interest in getting their commission right away.”
He counselled potential sellers to keep perspective.
“Point one of a per cent is peanuts in the grand scheme: it really doesn’t matter. And if it scares other people off the market, it might actually be a good time to sell, because there are fewer houses on the market,” Mr Gray said.
He said high-quality houses in what he called “blue chip suburbs” that are close to schools and public transport would continue to sell well, adding that, when markets cool, it is the lower quality houses that tended to suffer.
“If you’re looking to sell, it all depends on how well you bought originally. If you bought well, the chances are you’re still going to be fine. But if you were desperate to buy your property before, you might struggle to sell.”
His message to buyers, meanwhile, was to buy well.
“On the one side, now may be a better time to get a bargain. But the chances are you’re still going to have to pay a premium for somewhere good.”
He predicted that suburban dwellings – either freestanding or units –would hold their value consistently over the long-term, while high-rise developments in the central areas such as Melbourne’s Docklands and Sydney’s Green Square would be “boom and bust every two years”.
What’s behind Sydney’s cooling market?
Mr Gray said there were two factors behind the Sydney cooling.
Firstly, restrictions placed by the prudential regulator APRA on bank lending were making it more difficult for buyers to borrow vast sums of money.
Someone who could have borrowed $1 million this time last year might only be able to borrow $700,000 or $800,000 today, he said.
The other reason, he said, was consumer sentiment. “Interest rates are still pretty low, but consumers have heard that the property market is going to crash,” he said.
This meant consumers were holding off buying while they waited for prices to fall – a self-fulfilling prophecy.
He said these two factors sufficiently explained why prices were falling in Sydney but rising in Melbourne and elsewhere.
The average property price in Sydney is $909,613, while in Melbourne it is more than $200,000 less, at $703,816. He said that meant there was still room for growth in the Victorian capital.