FROM FOMO TO OH-NO: The massive power shift in Australia's largest housing markets

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  • Conditions in the Sydney and Melbourne housing markets have changed significantly over the past two years.
  • Vendors, on average, are now having to offer larger discounts in order to secure a sale in both cities.
  • 83.3% of homes in Sydney, and 76.3% in Melbourne, are now selling for less than their original listing price. That’s in stark contrast to less than two years ago.

Conditions in the Sydney and Melbourne housing markets have changed significantly over the past two years.

Gone are the days of FOMO-inspired double-digit annual percentage price growth. Instead there’s now weak demand, a glut of supply, and well-documented price declines that many suspect will continue for some time to come.

Here’s one in a long list of indicators that show just how abruptly market conditions have turned.

From CoreLogic, it shows the percentage of Sydney homes that have sold above, at, or below their original listing price going back 12 years.

CoreLogic

It’s an extraordinary turnaround.

In mid-2015, more than 75% of Sydney homes sold for more than the original listing price. Today, 83.3% are selling for less than that what they were originally listed for.

Given weak demand and a glut of homes sitting on the market, CoreLogic says Sydney vendors are now discounting their asking prices by an average of 7.3% higher than the 5.4% average discount seen a year ago.

Unsurprisingly, similar trends are also evident in Melbourne — where median home prices have actually fallen faster than Sydney this year — with 76.3% of homes selling below their original sale price, the highest proportion in over 12 years.

CoreLogic says vendors in the city are, on average, currently discounting their original sale price by 6.1%.

CoreLogic

While some may disagree given the run-up in prices in both cities over recent decades, it’s clearly a buyer’s market in late 2018.

Demand is weak and supply is plentiful, meaning prices, and expectations, are now adjusting accordingly.

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