Research report hints at more pain ahead for Sydney’s property market

Friday, 31st May 2019

There could be a number of challenges ahead for Sydney’s property market, according to the latest report from Momentum Wealth’s research division.Australian Residential Property Update

The Australian Residential Property Update, which examines leading performance indicators across Australia’s major capital city property markets, showed that house prices in Sydney were already down 13.3% from their 2017 peak, with the average median house price dropping to $950,000 in December 2018.

However, further data suggests the worst could still lie ahead for the capital city market, with the report showing that Sydney is yet to face the implications of a prospective oversupply of stock after construction levels reached a peak in June 2018.

At the same time, transaction levels in the market have already declined 34% in the three years to September 2018, suggesting the demand simply isn’t there to absorb the excess stock.

Time to turn to other markets

Whilst the Sydney and Melbourne markets have long remained a popular choice amongst investors after experiencing record levels of price growth from 2012 to 2017, the latest results confirm it may be a good time for investors to turn their attention towards alternative markets.

The research report showed that a number of property markets across Australia are showing promising prospects in 2019, with Adelaide, in particularly, recording the highest confidence levels of all capital city markets for five consecutive quarters to March 2019.

Whilst moderate price growth has meant that many investors have overlooked Adelaide’s property market in favour of Melbourne and Sydney in recent years, figures showed that transactions were up 27% since early 2014, with a declining unemployment rate and sustained population growth suggesting further price growth could be on the cards for the market.

At the same time, the report also highlighted significant improvements in Perth’s rental market which, coupled with rising activity in the State’s resources sector, point towards positive signs of a market recovery in WA.

Data from the report showed that average rental prices rose 4.40% annually in the year to April 2019 in WA, with the State also ranking second in Property Council’s State confidence index in March 2019 behind Adelaide.

Despite headline figures recording an overall decline in median house price, the report explained that pockets within Perth’s property market have been experiencing price growth for over 18 months, with a number of areas within Perth’s central sub-region experiencing positive price movements since late 2017.

Whilst Momentum Wealth Research warned that investors will need to remain cautious of outer suburbs that are still facing considerable oversupply, these initial improvements suggest a more positive road lies ahead for WA’s property market.

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