According to Cotality’s daily dwelling values index, Sydney dwelling values are falling rapidly, down 1.1% over the past 28 days.
The accelerating decline in Sydney dwelling values follows a collapse in the city’s auction clearance rates, which are tracking in the 40s – the lowest level since the start of the COVID-19 pandemic.
The weekend’s preliminary auction clearance rate of 47.4% was also the city’s lowest since the week ending 19 April 2020, suggesting the final clearance rate will fall into the low-40s when they are released later this week.
The collapse in Sydney’s clearance rate and prices suggests that buyers have lost confidence and gone on strike.
Cotality’s head of research, Tim Lawless, backs this view, describing the situation as a “crisis of confidence” arising from the Reserve Bank’s interest rate hikes, the Middle East conflict, and changes to negative gearing and capital gains tax (CGT) in the federal budget.
“We have seen a recent acceleration in the downwards trend, but we were seeing clearance rates coming down in line with higher interest rates with a crisis in confidence amid the Iran war and higher inflation”, he said.
“I think it’s fair to say that, post-budget, we’ve probably seen a further blow to confidence that is seeing clearance rates fall even further”.
“I think absolutely, we should expect there’s going to be a further loss of momentum in the pace of growth in housing values”.
“For buyers, they’re back in the driver’s seat in many ways; they’ve got more stock to choose from”, Lawless said.
Sydney is easily the most expensive housing market in the nation, with the largest mortgages.
“When you’re having to borrow about $150,000 extra than someone in the next biggest state, higher interest rates will obviously affect households more here in NSW than elsewhere”, NSW Treasurer Daniel Mookhey said last week.
As a result, Sydney tends to be the most sensitive to changes in interest rates and borrowing capacity, which explains the city’s sharper price decline.
