“As much as interest rates have had a massive impact on property prices, I think it’s COVID – related issues, especially the shifting work from home and people spending more time at home who have put a premium on houses,” Mr Aird said .
Inflation would be more subdued in 2022, he predicted, after predicting a further 7 percent growth, with prices to peak in the second half.
But as Mr Aird and other economists now expect the Reserve Bank to raise interest rates in August due to strong inflation, lower unemployment and signs of wage growth, the market was likely to reach its peak now that a rate hike would affect where much buyers were willing and able to borrow. The rise in fixed interest rates already underway will also affect the flow of credit and weigh on prices, he added.
Westpac senior economist Matthew Hassan said Sydney had seen spectacular growth, but prices were likely to moderate and even fall by the end of the year as interest rates rise. Westpac raised its fixed interest rates on owner and investor loans last week and has predicted a cash rate hike in August of 15 basis points.
Affordable restrictions would also cause problems for first-home buyers and those who want to return to the market, Mr Hassan said, easing buyer demand. Short bursts of sharp price increases were generally followed by a longer period of stabilization, he added.
Dr. Powell said the Sydney market had already changed, with the total number of homes for sale rising and prices at the top end of the market – which typically lead to price cycles – retreating slightly. The median in the eastern suburbs fell 0.6 percent in the quarter to $ 3.6 million, while the northern beaches had the second-lowest quarterly growth of 2.6 percent.
Weaker growth across the two regions, which had been outstanding artists during the pandemic, showed conditions were easing, Drs. Powell.
This weakness would surge across the city in the coming months, just as price increases had done – with remote or more affordable areas such as Baulkham Hills and Hawkesbury, Sutherland, Central Coast, Outer West and the Blue Mountains recording the strongest growth in the last quarter.
The market shift was welcome news for homeowners like Anton and Nicole Kastner, who in mid-December bought their first family home, a 4-bedroom duplex in Kingsgrove, after about a year of seeing the market and years of savings.
“It was always a bit discouraging, especially when you talk to agents and they say a property will cost between $ 800,000 and $ 1 million and you think ‘okay, we could probably do that’, then it ends up going for $ 1.3 million to $ 1.4 million at the auction, “said Mr Kastner.
They bought faster than expected when they started searching proactively, with the help of buyer’s agent Hamada Alameddine from Buyer X, but still had to compromise along the way, after starting their house hunt in the inner west. The sale of an Adelaide unit and a little help from the family – which offered reduced rents – was also key.
“We were so lucky with the property we got, we can easily be in there for 10 to 15 years, but understood well if we went closer to the city [our family] could only be there for two or three years. Once you start leading, there are obvious compromises you need to make, ”he said.
Sir. Alameddine said the rise in homes for sale had given buyers more choice and reduced fears of missing out on something, but noted that A-class homes were still experiencing strong competition. However, he said buyers became more concerned about interest rate hikes and were more reluctant to reach their maximum budget.
with Melissa Heagney
The figures given are based on domain data from its quarterly house price report published today. CoreLogic has Sydney’s median house value of $ 1,374,970 in December, using a method that measures the value of the specific housing market based on the properties of properties traded, such as plot size or number of bedrooms, instead of calculating a stratified median price. based on sales, as in the domain data.