Fletcher Rowe | August 9 2017
Sydney property prices have again edged higher, according to CoreLogic’s latest weekly report released for the first week of August.
The report released last week showed that surprisingly high auction clearance rates were keeping the market competitive and turning around what threatened to be a slump after a sluggish end to July.
Sydney’s clearance rate of 71.1% again failed to surpass Melbourne, with 75.7% of homes actually selling.
But this figure was a significant turnaround from the previous week’s 65.4%, which was the lowest so far this year.
SQM’s Louis Christopher forecast Sydney’s property prices to rise between 11% – 16% for the 2017 calendar year, but was hesitant to provide a forecast for 2018, citing RBA cash rate rises and further aggressive action from the regulatory body, APRA, as the major drivers of uncertainty.
Most analysts agree, however, that this growth should slow through the December quarter and into 2018.
Investment bank J.P. Morgan mirrored this.
“Given that investor lending was a key marginal driver of the most recent upswing in Sydney and Melbourne prices, we expect that, absent a significant pickup in owner-occupier mortgage growth, capital city house price growth will continue to moderate this year.”
Recent rumblings amongst analysts have suggested that interest rates were due for a hike, after what has been over 12 months of record low cash rates. A potential rate rise in November would be the first in 7 years.
APRA recently announced recommendations to strengthen banks’ equity targets and has set a higher target for the RBA cash rate at 3.5%. This could further widen the gap between variable mortgage rates and the cash rate, as banks try to protect their profit margins and shareholders.
A rise of 50 basis points could be enough to drive investors away from the property market, according to a CoreLogic report released in May.
Likewise, NAB Chief Economist, Alan Oster, noted increased activity among first home buyers during the June quarter, accounting for 35.7% of all new property sales – the highest level since NAB began tracking this statistic in 2014.
“Clearly, tougher measures on banks announced by regulators to rein in investor lending are being felt in this segment of the market” said Mr Oster.
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