RBA triggers Sydney housing market collapse

CoreLogic’s preliminary auction results reported another weak result for Sydney, with only 55.9% of the 898 auctions held over the weekend reported as sold.

When final results are gathered later this week, Sydney’s clearance rate is certain to fall into the low-50s – levels not seen since April 2020 when the nation was gripped in hard lockdown:

Preliminary auction results

Sydney again drags nation’s auction clearance rate lower.

The weak result in Sydney dragged the national clearance rate to 59.8% – way below the 75.4% of successful auctions in the same weekend last year.

Sydney’s auction clearance rates have historically been a good leading indicator for price growth, as illustrated below, meaning price falls should accelerate:

Sydney auction clearance rates

Price falls to accelerate.

Indeed, Sydney dwelling prices began plummeting after the Reserve Bank of Australia (RBA) began its rate hiking cycle in early May with its initial 0.25% rise:

Sydney dwelling prices plummeting

Sydney dwelling values in free-fall after the RBA began hiking rates.

Sydney dwelling values have plummeted 1.3% so far in June to be down 2.9% from their February peak.

With the RBA certain to hike rates aggressively for the foreseeable future, Sydney is staring down the barrel of double-digit price falls in 2022 and further heavy falls in 2023.

How deep the correction goes will obviously depend on the aggressiveness of the RBA’s monetary tightening. But the way it headed, Sydney is facing its biggest housing market bust in generations.

Unconventional Economist
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Comments

  1. May 2019. Serviceability floor rate was removed by Frydenbergs influence. Should have never been permitted to drop below 6.5%. Wayne Byers had one job. Now housing is in a proper bit of strife here.

  2. Hasn’t even started
    We are going to see 1980s level interest rates of 10 plus %
    Probably close to 20% or higher
    Do your serviceability on that,
    Prices will be 60 to 80% minimum lower than now
    The 5 year fixed rate at ANZ I think it is, already 6.09% in that’s in 1 year from 2%
    You think it’ll be hard for interest rates to be 12% in 2 or 3 years ……easily
    The RBA is a joke
    Are we going to see 75bp or 100 bp hike, 75 has to be a min & I’d say 50 min August
    This is what I said a year ago, rates rise much faster than they fall
    It won’t take much to push rates above 10%
    What a statement to say rates won’t rise for years
    If you have your powder dry, you’ll pick something up for at least 60% cheaper than now
    My guess mid to later 2023

    • working class hamMEMBER

      10% variable and Australia is cactus.
      Not saying it won’t happen, but what would the unemployment level be, 15-20%?
      Irish style reckoning.

      • Sharemarkets probably bounce from here, think market is very short & sentiment is very bearish
        Rally might be longer than everyone thinks
        Think macrobusiness might be making the same mistake it does it gets more & more bearish the lower we go & they miss turning points
        You notice on Friday DLS articles get more & more bearish, should be easing back a bit & market bounces
        Remember majority are most bearish at the bottom & this site seems to do this
        Anyway DLS has locked his articles & I think even deleted a comment I wrote that disagreed
        He doesn’t like anyone that has an opposing view
        He likes his fan club only

        • I suspect stocks have at least one more leg down when the Fed finally breaks something. The counterparty risk of dead banks has certainly not been accounted for. Plus the zombie reckoning.

          • That is the obvious outcome
            Problem everyone thinks the same thing
            Happened in March last year went DLS called Tech wreck & Nasdaq just kept going up
            Maybe but rates are falling

      • Reusa nothing has changed, they just extended the time frame
        Property prices were always going to fall 60 to 80%

        • The sooner and faster any correction happens, the fewer people will get hurt.
          For most, it will be a household balance sheet correction.
          Sure, the servicing cost of any mortgage will be felt, but if the purchase price – and existing debt – is historical, then the current prices won’t get embedded.
          Any sales from now will embed higher prices, and that’s the last thing both of our economies need.

          • I know conventional wisdom says, it’s never to late to make the right long term choices
            But I suspect we are way too far down the wrong path to even think about turning around.
            At the moment I’m trying to hire an Engineer with experience in SLAM (Simultaneous Localization and Mapping) basically it’s an optical method to build a real time map of the environment you’re in. It is super important for any Autonomous robotics, especially if the environment is continually changing (people moving about, you moving from one location to another). This is not a completely new field, it’s been incorporated into product since about 2010 (it is an essential part of any self driving car)
            Yet I can’t find any Aussies with relevant experience, and I mean none!
            How did we fall so completely off the Technical wagon in under a decade. I think the answer is that the real damage was done 20 years ago and we’re feeling it’s impact today.
            As we begin to pick-up-the-tools again we’re discovering that very few of us know wtf we’re doing.
            On the SLAM side I’ve interviewed lots of people who have “written a report” and to be honest the reports read like a High School English assignment. F-all understanding of the problems, no viable solutions and lots of “better-not-go-there” Risk assessment.
            FFS if this is the standard of modern day Aussie engineering than we’d better stick to bed-pan management.
            Sorry rant over!

    • The Wizz of Ozz

      Bcnich you know that lithium mine you have stocks in see if you can get dose you might see things in different light

      • House prices double every 7 years & rates will stay low for ever because Phil,Lowe said so
        Does that make you happy

    • What about the post that said, OCR will recede back from here and mortgage rates will fall back for a bit? Or is that just saying, it won’t be a straight line to hell?

      • Divya
        They are going to put everyone through a slow painful death
        They will make everyone suffer for years
        But interest rates are going much higher & house prices much lower

        You won’t ever see 2021 house price highs again in your life

        House prices will fall hard but there will be bounces but then just down

        Buying a house will be very hard from here on, will be very hard to get credit & there won’t be much choice of banks

        Our banking system we have now will look completely different next year = not sure what the clowns will come up with but I’m sure it’ll be something controlled by government

        Everything seems to be moving to socialism

    • To this;

      “We are going to see 1980s level interest rates of 10 plus %, Probably close to 20% or higher”.

      APRA serviceability and valuation guidelines put the onus back on the regulator and banks. People were tested at 6-7% and valuations (by the bank) determined 80-90% lending criteria.

      Banks would be forced to write down their valuations and then punters would be measured on their serviceability on the new value.

    • Holiday In ScomodiaMEMBER

      Yep any meaningful correction along with a drop in AUD will get it cranking. No FIRB or AML action any time soon, and I still have creation of new ‘cashed up resi property buyer visa’ on my 2022 bingo card if things get too dicey for local buyers. For all the whinging on here, Aus is still a great place to live… itsa notso bad, itsa nice a place…

  3. ErmingtonPlumbingMEMBER

    Geez it’d be nice if house prices dropped down below 200k at Hawks Nest.
    I’ve always wanted to own a holiday house there and felt forever priced out once prices rose over 4 to 500k.
    Fingers crossed🤞

  4. Muttafukaburrasaurus.MEMBER

    I have always thought the shitty restrictive and corrupt environment of Sydney and the mindless consumer greed of its denziens wrecked a nice harbour.

  5. It only just starting now. Hundreds of basis points to come and we will see the impact on investor psychology. The bubble will die when the million or so baby boomer investors cut and run (coz they see their retirements going down the gurgler).

    • That could be their plan. Burn boomers retirement funds and equity so they have to keep working.
      Wouldn’t that be a belly busting laugh…

  6. And it’s DLS point that the coming gas gouging energy shock in Aus will cause a wave of inflation no amount of rate rises can stop.

    • Inflation has peaked & energy prices are going to start falling
      Only another 2 months July Aug of hikes probably 75bp at each
      RBA will be cutting rates by Oct Nov
      Home loan Fixed rates will already be falling from July Aug

      You guys all missed the rate hikes
      Nearly or actually everyone on here missed the rise in bond yields up to 10 year 4%
      This site said they were going from 1% to 0%

      Interest rate rises globally nearly all over AUG peak with falling rates after that

      • ErmingtonPlumbingMEMBER

        Hang on a sec you just said 6 or 7 hours ago that,
        “We are going to see 1980s level interest rates of 10 plus %
        Probably close to 20% or higher”
        Now your saying they are going to be falling this year?

        • Ermo
          You have corrections in every market
          Rates medium term have peaked & are falling into a recession depression & crisis

          What do you think these imbeciles will do they’ll print & print until we have hyper inflation

          Over next 5 years you’ll see 1989 level interest rates
          But just here now over the next 2 or 3 months rares will be cut into OCT NOV

          Won’t help house prices because the banks won’t survive the first half of next year

          Get ready for the bail outs

          Brrrrrrrrr = hyper inflation = 1989 all over again

          Petrol is going to fall back to $1.20 per litre & home loan rates will be lower after 2/3 months of increases

          In summer it’ll be $1.20 per litre lower rates & maybe 2 banks not 4

          THE LONG TERM TREND IN INTEREST RATES IS UP

        • Bless Bcnich but he says a lot of half contradictory things. Makes it hard to really know what is the actual prediction.

  7. Who is Wayne Byers? I do know about a bloke called Wayne Byres. He is the boss of APRA. Pls try and get it right.