Sydney house prices continue to bounce back, according to the CoreLogic daily dwelling values index.
Sydney’s dwelling values index has rebounded by 0.4% since 7 February, reducing the peak-to-trough decline to 13.6%:
Accordingly, Sydney dwelling values have actually rebounded 0.26% over February.
This rebound has also dramatically slowed Sydney’s quarterly loss rate, from around -4% at the beginning of the month to -2.8% currently:
The big question now is whether a new upcycle has begun for Sydney, or whether this represents a dead cat bounce?
I am in the latter camp, given the Reserve Bank of Australia (RBA) has signaled further interest rate hikes in the months ahead.
Assuming these rate hikes are delivered, borrowing capacity will shrink further, which should pull dwelling values lower.
There is also the prospect of significant numbers of forced sales arriving later in the year as huge numbers of borrowers reset from cheap pandemic fixed rates to variable rates that are at least double current levels.
On the other hand, there is also the prospect that APRA will lower its mortgage repayment buffer, which would increase borrowing capacity (although it could also force the RBA to tighten further).
In any event, it will be an interesting period ahead for house price watchers like me.
