Property boom is over in Sydney and Melbourne say experts

The biggest property boom in Australian history is over, with real estate experts now telling prospective buyers not to enter the market.

After years of record growth both Sydney and Melbourne have seen property prices slow or go backwards in recent months, ABS statistics released on Monday revealed.

It comes after a weekend where the clearance rate for homes put up for auction sat at just 58 per cent, an enormous drop from 73 per cent at the same time last year. 

Its led experts in the industry to claim the bubble has finally burst, warning buyers to now sit tight for at least the next six months until things calm down.

 

One of the biggest property booms in Australian history is over, with real estate experts now telling prospective buyers not to enter the market in either Sydney (pictured) or Melbourne

This four-bedroom mansion in the Sydney suburb of Hunters Hill was initially listed at close to $6 million, but its owners were forced to settle for just $4.8 million in 2017

This four-bedroom mansion in the Sydney suburb of Hunters Hill was initially listed at close to $6 million, but its owners were forced to settle for just $4.8 million in 2017

Auctioneer and real estate expert Robert Klaric, who has worked in Sydney for more than 30 years, says he’s finally willing to declare that the boom is done.

‘I’ll call it and say it’s over,’ Mr Klaric told Daily Mail Australia.

‘It’s been by far the biggest and sustained boom I’ve seen. Really since 2012 its been a steady increase, with the biggest growth in the last three years. 

‘But from next year it will be an adjustment to a sustained market at 10 per cent or so lower… from about July there’ll be a smorgasbord of cheap properties to pick from.’

On Monday the ABS released statistics showing property prices fell by 1.4 per cent in Sydney alone during the September quarter.

It’s the first time prices had gone backwards in the Harbour City since mid-2016. 

In Melbourne property prices increased by 7 per cent, just half the rate they did last year.

According to Shane Oliver, AMP’s chief economist, it’s confirmation that time indeed has come on what appeared to be the never-ending growth of the property market.

‘I think the boom is certainly over, but in saying that, it mainly relates to Sydney and Melbourne where the boom has been,’ Mr Oliver told Daily Mail Australia.

‘In Sydney the bubble has well and truly been pricked… and the ABS data today has well and truly confirmed that we’re seeing price declines. 

‘Melbourne is a little bit stronger, it does seem to be following Sydney down, but it’s getting a bit of support from a higher population growth.’

At its peak the property boom led to homes across Sydney rising in price by as much as $370,000 in less than two years.

Robert Klaric (pictured), who has worked in Sydney for more than 30 years, says he's finally happy to declare the boom is done

Robert Klaric (pictured), who has worked in Sydney for more than 30 years, says he’s finally happy to declare the boom is done

Mr Klaric said that from the beginning of 2018 growth will grind to a halt before dropping by an estimated 10 per cent

Mr Klaric said that from the beginning of 2018 growth will grind to a halt before dropping by an estimated 10 per cent

Sights such as this with more than 200 people queuing up for an open for inspection may soon be a thing of the past, with several experts predicting rental prices will also drop

Sights such as this with more than 200 people queuing up for an open for inspection may soon be a thing of the past, with several experts predicting rental prices will also drop

But recently home owners have had it harder to sell, with one particular home in the Sydney suburb of Hunters Hill taking almost 200 days to sell.

When the owners did find a buyer it was for $4.8 million, a massive drop down from the initial asking price of almost $6 million.

Describing the housing markets outside the nation’s two biggest cities as ‘messy’, Mr Oliver said he would be advising potential buyers to bide their time.

He predicts it will be up to 18 months before prices rise again, but can’t see a severe housing crash on the horizon.

‘Are we going to have a crash? Probably not, unless we have higher interest rates or higher unemployment it’s hard to see a crash coming,’ he said.

‘I think it’s just another correction in the property market. In 2005, 2008 and 2012 we saw declines in Sydney so it’s probably just correcting itself which I think is healthy.’

Perth, Darwin and Canberra also experienced falls in property prices last quarter, however Melbourne, Brisbane and Adelaide saw slight increases. 

While the facts are seemingly clear, Mr Klaric says many real estate agents are still refusing to admit it’s over.

‘The numbers coming out are shrouded in secrecy, but the one thing that never lies is the auction clearance rate,’ he said.

WHEN SYDNEY WAS BOOMING: 

A four bedroom home at Narraweena sold in 2017 for $1.7 million, less than two years after selling for $1.35 million in 2015.

Also this year, a two-bedroom unit at Freshwater was sold for $950,000 just three years after being bought at $645,000

In 2017 a three-bedroom home in Marrickville sold for $1.2 million. It had last been sold for £300 in 1915.

A fire damaged home in Redfern sold for $1.6 million in April this year, having fetched $275,000 when last sold in 1994 – an almost 600 per cent increase in the past 23 years.

A waterfront home in Watsons Bay sold at auction for $14.2m in October this year, having been valued at $950,000 in 1993

Source: Mario Esposito, McGrath Estate Agents – Dee Why

Despite the ever increasing number of apartments popping up in western Sydney (pictured), a leading real estate expert has issued a dire warning for its more than two-million residents

Despite the ever increasing number of apartments popping up in western Sydney (pictured), a leading real estate expert has issued a dire warning for its more than two-million residents

The impact of overseas buyers has also dropped off in recent months, particularly in Sydney where construction of apartments has been targeted towards Chinese investors (pictured)

The impact of overseas buyers has also dropped off in recent months, particularly in Sydney where construction of apartments has been targeted towards Chinese investors (pictured)

Shane Oliver, AMP's chief economist, says it's confirmation that time indeed has come on what was seemingly the endless growth of the property market 

Shane Oliver, AMP’s chief economist, says it’s confirmation that time indeed has come on what was seemingly the endless growth of the property market 

‘On Saturday it was 58 per cent… while the actual figure is probably a lot lower, but agents are not giving actual figures.

‘Agents say “we’re still negotiating” or “the clients don’t want to disclose”, when it’s actually the agents who don’t want to disclose because they’ve passed it in.’

A total of 249 properties were passed in at auction over the weekend, while 130 were withdrawn beforehand. 

Mr Klaric believes the end of the boom will lead to a change in thinking on investing and is predicting that could be disastrous for Sydney’s west.

He says people have already moved away from buying off the plan and are searching for a lifestyle, something he said will keep city prices steady. 

‘People now want specific locations with lifestyle and infrastructure. If areas have got that then the impact won’t be as brutal,’ he said.

‘If you said I want to live in Sydney, or in Bondi, Mosman, Manly or Chatswood, they all offer a lifestyle and infrastructure to get to the city, so they will adjust.

‘But out in the west we could see absolute carnage.’ 

Mr Klaric says the boom won't affect areas with sought after lifestyles, but could cause 'carnage' in Sydney's west

Mr Klaric says the boom won’t affect areas with sought after lifestyles, but could cause ‘carnage’ in Sydney’s west

Mr Klaric is advising his clients to steer clear of the market, saying if they wait for at least six months they could snag a bargain whether buying or renting

Mr Klaric is advising his clients to steer clear of the market, saying if they wait for at least six months they could snag a bargain whether buying or renting

Mr Klaric is advising his clients to steer clear of the market, saying if they wait at least six months they could snag a bargain.

‘The market’s been playing by the FOMO (fear of missing out) process and the reality is it was flamed by the real estate industry and the media,’ he said.

‘Now’s the time to just sit back, relax and watch, because from about July next year it will be a smorgasbord to choose from at a discounted price.

‘Renters will also get a lot more new properties coming onto the market and there is going to be a glutton of units in the market. 

‘If you’re looking to rent a two-bedroom apartment within a 10-15 kilometre radius of the city there will be a heap of options all a lot cheaper than they are now.’

'Now's the time to just sit back, relax and watch, because from about July next year it will be a smorgasbord of properties to choose from at a discounted price,' Mr Klaric said

‘Now’s the time to just sit back, relax and watch, because from about July next year it will be a smorgasbord of properties to choose from at a discounted price,’ Mr Klaric said



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