What Can We Learn from 30 Years of Sydney Property Markets


Following Sydney’s recent market peak in mid-2017, Sydney’s property market history over the past 30 years shows a story of three booms and four downturns, Propertyology research reveals.

Sydney’s property prices increased by 70 per cent before the downturn started, with prices currently back to mid-2016 levels.

ABS data shows Sydney’s median house price of $1,075,000 in June 2017 dropped by $175,000 to $900,000 by September 2018.

It’s well known further softening in the market has taken place since then, Propertyology head of research Simon Pressley said.

“If the various analysts who are forecasting an additional 10 per cent drop during the 2019 calendar year are correct, Sydney’s median house price will be sitting around $780,000 by Christmas 2019,” he said.

“And, if the Sydney market were to bottom at that price, it would equate to a $295,000 decline since its peak. That’s a big hit on a standard house.”

This week the Reserve Bank of Australia attributed shifting interest rates as responsible for weakening house prices, more than any other factor.

National house prices dropped almost 7 per cent across capital cities in the 12 months to January, with Sydney leading the largest fall recording an almost 10 per cent drop.

Cashflow constraints

Pressley says recent investors in Sydney’s market are now faced with high holding costs.

The property market research firm shows investments in standard houses in northern suburbs like Frenchs Forrest have pre-tax holding costs, after rental income and expenses, of about $26,000 a year.

“In locations like Parramatta it was $31,000, and in Ryde it was $40,000,” Pressley said.

A basic house in Bondi now has annual holding costs of $57,000, while Balmain sits around $42,000.

“A standard apartment in those two suburbs still costs $16,000 and $21,000 in holding costs per annum,” Pressley said.

If the future of Sydney’s property growth cycle is anything like its historical trends, Pressley says the probability of someone who purchased a “stock-standard Sydney property” during 2017 may find their asset to be worth the same or less than what they paid for it in five, or even 10, years from now.

“Property markets do have a habit of tracking sideways for several years after a significant boom period.”

Related: What to Expect from the Property Market in 2019: Experts Weigh In

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