New report: Aus home prices drop again<\/a><\/p>\n![\"\"\/](\"data:image\/svg+xml,%3Csvg)
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ANZ economist Madeline Dunk said Sydney\u2019s market is slowing.<\/p>\n
Commonwealth Bank of Australia (CBA) released its yearly forecast in June, tipping a 6 per cent decline for Sydney house prices this year.<\/p>\n
CBA senior economist Trent Saunders added the \u201crisk\u201d for forecasts is that the declines could end up being larger than expected.<\/p>\n
\u201cOver the course of this year prices could come in a bit lower than what we\u2019re expecting, even though we are already expecting a fairly large decline of 6 per cent over the course of this year,\u201d he said.<\/p>\n
Mr Saunders said although its evident this year will be weak, the bigger question is what will happen to prices next year. CBA\u2019s forecast for 2027 is that Sydney will see a turnaround with a price rise of 3 per cent. <\/p>\n
\u201cThis is based on our view that the RBA will start to cut rates from May next year,\u201d he said.<\/p>\n
\u201cIf that doesn\u2019t happen, if those rate cuts don\u2019t come through, then there\u2019s a question mark about whether that recovery ends up taking place.\u201d<\/p>\n
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CBA economist Trent Saunders.<\/p>\n
AMP chief economist Shane Oliver said price falls were predicted around 8 per cent for the calendar year and about 8 per cent for the financial year.<\/p>\n
\u201cPrices are coming down for about four reasons,\u201d he said.<\/p>\n
\u201cOne is the rise in interest rates, second is the tax changes for investors, keeping the investors away, the third is poor affordability that was an issue after prices reached record highs last year. <\/p>\n
\u201cThen there\u2019s been a hit to confidence from the war and various other things, but obviously the first two are the main reasons.\u201d<\/p>\n
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AMP economist Shane Oliver. Picture: via Yellow Brick Road on YouTube.<\/p>\n
Mr Oliver said cheaper property tends to hold up a little better as Sydney navigates the downturn.<\/p>\n
\u201cUnits are holding up a little bit better \u2013 there\u2019s a bit of an affordability crunch on it,\u201d he said.<\/p>\n
REA and Westpac are both tipping Sydney\u2019s house price decline this year to be around 3 per cent. <\/p>\n
\u201cThe cost of borrowing obviously has increased off the back of higher interest rates, but I think we\u2019re also seeing a lot of uncertainty in the market around what\u2019s going to happen to home prices,\u201d said REA Senior Economist Anne Flaherty.<\/p>\n
\u201cBuyers are becoming a bit more cautious and if we look at auction clearance rates, which have very clearly moved lower and are now sitting in the low 40 per cent for several weeks nationally. That\u2019s a pretty clear sign that there\u2019s a bit of a misalignment between buyer and vendor expectations, which normally precedes price falls.\u201d<\/p>\n
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REA Group economist Anne Flaherty said Sydney\u2019s higher prices made it more vulnerable to interest rate hikes.<\/p>\n
Ms Flaherty said Sydney can be more susceptible to these price falls due to being the most expensive capital city in the country, meaning the average homeowner in Sydney has a larger mortgage.<\/p>\n
\u201cThe dollar value impact of an interest rate rise is typically higher for people in Sydney compared to elsewhere in the country,\u201d she said.<\/p>\n
Ms Flaherty added there are also signs that investors are pulling back due to tax changes, that will reduce overall demand and expected to flow into lower home prices in the second half of 2026.<\/p>\n
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REA is forecasting 4% rise in prices and CBA a 3% rise for 2027. Picture: Gaye Gerard<\/p>\n
Looking ahead, several forecasts expect Sydney\u2019s house prices to bounce back in 2027, particularly if interest rate cuts begin to flow through, with REA forecasting a 4 per cent for the year and CBA a 3 per cent rise. <\/p>\n
Ms Flaherty said the underlying fundamentals of the property market suggested the longer-term outlook for prices over the coming years was further increases.<\/p>\n
\u201cEven if we do see prices come down this year, taking a longer term view we still have a significant under supply in most of our capital cities,\u201d she said.<\/p>\n
\u201cIf we look at the total number of new homes being built compared to government forecasts for population growth, we\u2019re likely to continue seeing fewer homes built than is required to house a growing population for the next couple of years. <\/p>\n
\u201cUntil that story turns around, what happens with interest rates, what happens with tax settings, they\u2019re going to only have so much of an impact on prices. Longer term, it\u2019s that supply and demand piece that will really dictate where prices move.\u201d<\/p>\n
MORE: Panicked homebuyers abandon Sydney auctions<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"A growing chorus of financial insitutions and property research groups has warned Sydney\u2019s real estate downturn could extend…\n","protected":false},"author":2,"featured_media":773642,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":["post-773641","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/773641","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=773641"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/773641\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/773642"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=773641"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=773641"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=773641"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}