Sydney property losses crash through 10%

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By Leith van Onselen

Yesterday, the Sydney housing market hit an important milestone, recording a peak-to-trough decline of 10% after falling for 17 consecutive months:

Already, this is the second worst housing correction experienced in Sydney over the past 40 years:

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It is also happening at a much faster rate than Perth’s housing correction, which has taken place over more than four years:

This housing correction is also gathering steam, with quarterly losses accelerating to 3.1% – the fastest pace since 1989:

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Losses are also likely to accelerate, given auction clearance rates continue to plunge to new lows:

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Sales volumes are crashing:

As are investor mortgage commitments:

As you can see, all three metrics show a very strong correlation with price growth.

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Add to these headwinds further credit tightening likely to arise from the banking royal commission, the evaporation of Chinese demand, as well as Labor’s promised negative gearing and capital gains tax restrictions, the only way is down.

Based on current information, Sydney is looking at peak-to-trough declines exceeding 20% with the crash extending into 2020.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.