February 2019 - Sydney Property Market Report
By Bernie Tynes
Rental market review
The December 2018 REINSW Vacancy Rate Survey saw Sydney metropolitan vacancy rates up by 0.2 of a percentage point to 3.2 per cent primarily due to seasonality and a flooding of the market with newer units, making it more difficult to rent older properties. This has resulted in increased market competition and decreased rents and free rental incentives. Sydney house rents dropped by 0.4 of a percentage point to $705.50 per week, whilst unit rents were up slightly by 0.4 of a percentage point to $508.70 per week. Sydney rental yields for January 2019 were 3.4%. (Core Logic home price index – January 2019)
Sydney Property prices dropped by 1.3% in January 2019 (Core Logic Home price Index ). The decline is being driven by a combination of tighter lending conditions, poor affordability, surging unit supply, reduced foreign demand and the switch from interest-only to principle and interest mortgages. Additional fears of negative gearing and capital gains tax concession changes if there is a change in government due to a federal election have added to this decline. These declines have taken the median home value back to where they were in July 2016 ($697K for Sydney units, $903K for homes). The median discount was 6.1% in the last three months and 9.7% since their peak.
February Clearance Rates
Last week Sydney dipped to 795 auctions with a slight rebound of 61.3% clearance rate from 65.1% across the 1,259 homes taken to auction in February 2018.
Kevin Brogan, auction market commentator at Corelogic stated that “We’re facing a market that is going to be challenged by the difficulty of obtaining mortgages,”
“There’s been evidence that the difficulty of obtaining finance has reduced the number of people who are able to purchase at auction. Even if they’re positioning themselves to purchase a property, they may not be able to participate in an auction.”