Sydney’s house price correction has worsened.
Chart by Shane Oliver (AMP)
The weekend’s preliminary auction clearance rate softened on historically weak volumes.
Chart by Shane Oliver (AMP)
The decline in Sydney dwelling values has also accelerated, falling by 1.4% over the past 28 days, according to Cotality.
Over the past quarter, Sydney dwelling values have declined by 4.3%, an annualised run rate of just over 17%:
The current decline from peak for Sydney dwelling values has also surpassed 6%, according to Cotality:
Last week, ANZ Bank forecast that Australian capital city dwelling values would decline by 10.6% from their peak, the largest decline in more than 40 years.
Source: Cotality
ANZ forecast that Sydney would lead the national decline, with values expected to fall by 14.5% from their peak.
Of course, Sydney’s decline needs to be viewed in the context of the strong value gains recorded in recent years.
According to Cotality, even a 20% downturn would only take Sydney’s housing market back to around May 2021:
Source: Cotality
However, while a steep decline in values may not faze those who purchased Sydney property years ago, it would severely harm recent first home buyers who purchased using the government’s 5% deposit scheme.
Many of these buyers face the prospect of falling deep into negative equity, whereby their mortgage is greater than the value of their home.
