Sydney's property market is going backwards for the first time since early 2019, with new data revealing house prices have fallen 2 per cent over the past three months.
The coronavirus pandemic stopped Sydney's strong price recovery in its tracks, with the latest Domain House Price Report data, released Thursday, showing the median house price dropped by almost $23,000 over the three months to June.
Some regions in Sydney have fallen by more than $125,000 since April.
Experts say the overall impact of COVID-19 on Sydney's property market has been fairly minimal so far, although the declines are expected to worsen in the coming months.
“The market has changed quite quickly,” said Domain senior research analyst Nicola Powell. “But price falls to date have been minimal; significant government stimulus, mortgage holidays and low interest rates have helped to support home values.
“Vendors aren't accepting low-ball offers … but we have seen a lift in sellers reducing asking prices – with 15.2 per cent of properties discounted in June, three times higher than the same time last year – which says further price weakness remains likely.”
Sydney's unit median fell by 1.9 per cent to $735,417 over the quarter, the first unit price drop in a year.
Head of Australian economics at the Commonwealth Bank Gareth Aird said price falls were milder than expected given the extreme amount of economic uncertainty.
“Initially when we went into lockdown there was a distinct lack of supply coming onto the market, so we saw auction volumes and listings come off very quickly. There weren't a lot of transactions … that automatically supports prices,” he said.
Mortgage deferrals, low interest rates and government support payments had prevented distressed sales, he said, adding the sales market had so far faired better than the rental market. He said tenants were generally more likely to be in casual employment in hard-hit industries like hospitality and tourism.
Across the city, the inner regions were hit hardest by house price falls, dropping $100,000 in the inner west, $125,500 on the lower north shore, $91,000 in the city and eastern suburbs, and $62,500 on the northern beaches.
This was typical of the upper end of the market, Dr Powell said, which usually leads both upswings and downturns.
The city's north-west and the Central Coast were the only regions where price growth continued over the June quarter.
Unit price falls were more scattered, with the largest drops on the Central Coast, the northern beaches and the inner west.
Despite the federal government's latest announcement that it would extend JobKeeper at a reduced rate until March 2021, ostensibly cushioning the economic pressure for mortgage holders beyond the original September deadline, forecasts for the housing market remained unchanged and largely grim.
Mr Aird said CBA was still expecting a peak-to-trough decline of around 10 per cent for Sydney's property market, and the JobKeeper extension was not a game-changer because the bank had already factored further assistance into their forecast.
This was echoed by Felicity Emmett, a senior economist at ANZ, who still expected a peak-to-trough decline of around 13 per cent in Sydney – with the market to bottom out mid-2021.
“If anything there is a probably a downside risk to those numbers, given we've had [a recent rise in coronavirus cases] … which is certainly going to impact confidence,” she said.
While forced sales were likely to be limited, Ms Emmett said the rising unemployment rate, lack of migration, weak rental market, and lower consumer confidence would put downward pressure on prices.
Softer prices have not deterred Sally and Jason Campbell, who are selling a two-bedroom Petersham apartment they bought as first-home buyers in 2013.
Having outgrown the property, which has been an investment in recent years, they decided to sell to upsize.
While recognising that they may sell for less right now, they also know they could save on their new family home. The weaker rental market was also a factor in their decision to sell.
“There's not much on the market and those things that are on are selling for quite high prices, so we felt like we should strike while the iron was hot,” Ms Campbell said. “We've done our research and thought that we could get a price that we would be happy with.”
Selling agent Matthew Carvalho of Ray White Erskineville, who had more than 70 people at the first open, said prices in the area had pulled back about 5 to 10 per cent during lockdown but had been rebounding since. He added fewer high-end houses were also coming to market, which could affect the region's median.
“We're generally finding the market to be quite buoyant … people are still being more selective but are seeing better value out there,” he said. “When something good comes on, people jump on it.”
**Source: Kate Burke: Domain