“Will prices go down further? » What’s next for the NSW property market

Despite the current state of turbulence in the New South Wales property market, with prices slowing or falling, interest rates rising and inflation soaring, a major new report has reported that buyers today are unlikely to regret their buying decisions.

“Downturns are always shorter and less severe than upturns,” said the author of the Domain Spotlight Report – NSWArea Head of Research and Economics Dr Nicola Powell.

“So while we’ve seen house prices in Sydney rise by 40 per cent over the past two years, we’ll now only see them fall by perhaps 10 per cent, so that’s still a major gain. “

“Any time we’ve had a downturn, that’s only about half the length of the recovery – that’s what we’ve seen over the past 30 years.”

Many first-time home buyers, downsizers and upsizers are hesitant now, waiting to see what the property market does next, said Ewan Morton, managing director of one of Sydney’s leading independent agencies, Morton & Morton.

“The big question is will prices go down further?” he said during a webinar on the report, released on Thursday.

“With rising interest rates and inflationary pressures, as prices have come back $315,000 in the eastern suburbs – although that’s compared to the $927,000 gained – will it slow further?

“That’s what not everyone quite understands… We’re all trying to bottom out.”

But the report says that while the Sydney housing market is now technically entering a downturn, there is often a larger percentage increase in prices compared to the subsequent decline.

As a result, he predicts that we are unlikely to see a return to pre-pandemic prices.

The last significant downturn was between 2017 and 2019, when house prices in Sydney fell 13.8% from high to low and, although interest rates did not rise at the time , it became harder to get a loan and there was less credit available to borrowers.

Additionally, the pandemic has led to something of a renaissance in Sydney’s outer suburbs with people now able to work from home much more regularly, Powell believes.

This is encouraging news for first-time home buyers like Sid Potluri, who has just bought and moved into his new flat in Schofields, in the LGA of Blacktown, where the median house price now stands at $970,375, after earning $220,375 from June 2020 to March 2022.

So far, this peak price has not dropped at all.

“I decided to buy looking at what I would spend on a mortgage and realized it was exactly the same as what I was paying in rent,” said Potluri, 35, who works as a manager. product.

First-time home buyers Harika Garapati and Sid Potluri in their newly purchased flat in Schofield, Sydney. Photo: Peter Rae

“And I felt that even though in this market correction it would only appreciate 5%, I would still be better off with that than paying someone else that money.

“It means I have something for the future, and with an ever-growing economy and plenty of job opportunities, I think we’re still in a good place.”

Potluri and his wife Harika Garapati, 29, bought the plan at ALAND’s Pandorea, the fourth stage of Schofield Gardens, paying $560,000 for a two-bedroom, two-bathroom apartment.

“It’s a great apartment with a great community vibe and with interest rates still low it makes us confident for the future,” he said.

Following the NSW budget, first-time home buyers now have the option of paying an annual levy and 0.3% tax on the value of their land rather than onerous stamp duty – another factor that could help a lot.

Property Services Commissioner John Minns said explaining some of the ongoing changes and market movements was key to giving people more confidence.

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“Affordability informs most of the conversations people have around property,” he said. “So we have to do a great job of improving confidence.

“We need to communicate better and more effectively and provide more education to buyers and sellers, rather than having them caught up in the hype. One of my roles is to try to help the industry eliminate some of the market fears. »

While house prices in all of Sydney’s suburbs have risen over the past year, ranging from 6% to almost 58%, a major fear of all buyers and sellers at the moment is that Australia is on the verge of a recession.

Powell said she believes the country is well positioned to weather any adverse events, despite many unknowns, such as continued supply chain disruptions hampering construction and driving up costs, fueling house prices. .

“We have low unemployment, job growth and skills shortages,” she said. “Now the government is trying to focus on skills and talking about bringing in people from abroad.”

But while there are many unknowns, she pointed out that “historically, our downturns only account for about half of our upsides.”

Penny D. Jackson