In line with other surveys regarding the Sydney’s residential housing market, respondents in the latest CoreLogic RP Data-TEG Rewards survey of housing market sentiment are becoming increasingly pessimistic on the outlook for Sydney and Melbourne’s red-hot property markets.
Out of a total 1,006 responses received from across the country, only 29.7% indicated that now was a good time to buy in Sydney. That’s nearly half the 52.7% level for Australia’s other hot housing market, Melbourne.
Reflective of that outcome, along with near 50% capital appreciation seen in the current housing cycle, a whopping 82.8% of respondents indicated that now was a good time to sell Sydney property, marginally shading Melbourne at 76.4%.
“Dwelling values have risen by almost 50% in Sydney over the current growth cycle to date and Melbourne values are 35% higher,” note CoreLogic RP Data.
“Respondents in these areas are likely in tune with how strong housing market conditions have been in these locations and the opportunity to profit take after such strong capital gains.”
After such a period of rapid price growth in Australia’s two largest property markets, respondents are also wary that prices could potentially come down just as quickly as they went up.
69.9% of respondents indicated that Sydney property was vulnerable to a significant correction in values, along with 64.5% for Melbourne. In overall terms, 68% indicated that Australia’s housing market is vulnerable to a significant correction in values, a figure actually below the 75% level of the previous quarter.
Despite the perceived risks, it is interesting to note that 55% of respondents still indicated that they believed it was a good time to buy a property in Australia.
Clearly, many are still willing to enter the property market, a result perhaps of subdued housing market conditions outside of Sydney and Melbourne and record-low interest rates at present.
Today’s survey follows news last week that UBS, based on its new global property index of major financial centres, believes that Sydney is currently the third largest housing bubble globally, only beaten out of top spot by London and Hong Kong.
Damien Boey and Hasan Tevfik, research analysts at Credit Suisse, share a similar view to UBS, stating that Australian property is currently a riskier proposition than Australian stocks.
In line with the CoreLogic RP Data-TEG Rewards survey, sentiment towards the New South Wales housing market, almost entirely due to Sydney, has soured significantly in recent Westpac-MI consumer sentiment surveys.
It’s clear that sentiment, particularly towards the Sydney market, is softening, along with recent auction clearance rates.
The question many are now asking themselves is will prices follow suit?
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