Sydney is Australia’s most expensive housing market with the median dwelling price in the city now standing at $856,000, according to data from CoreLogic.
In July alone, prices increased by 1.4%, leaving the increase on a year earlier at 12.4%. A hefty increase in anyone’s language, but that could be about to change.
Auction clearance rates in Sydney have been falling for several months now, and, as this chart from ANZ Bank reveals, where auction clearance rates move, annual house price growth tends to follow.
ANZ has moved clearance rates three months forward to show the relationship between the two.
“Weaker auction results in recent months suggest that price growth will continue to ease, especially in Sydney. But there is no suggestion that prices will materially fall,” said Daniel Gradwell, senior economist at ANZ.
Indeed, according to preliminary data released by CoreLogic on Monday, Sydney recorded an auction clearance of 68% last week.
While this figure will likely fall when final figures are released by the group on Thursday, it still points to price growth in Sydney of around 8% per annum.
If the relationship between the two holds true, clearance rates would have to fall to the low 50% region for price growth to stall.
We’re a long way from those levels right now, suggesting that Sydney prices will likely add to the 113.7% increase seen since the GFC.