Remember picking up a newspaper or scrolling through your news feed a year ago and all you ever heard about was the constant rise in house prices throughout ‘the most livable cities in the world’?
The media is now unable to create the frenzy and fear of missing out as it once did:
According to Corelogic, the largest provider of property information, analytics and property-related risk management services in Australia and New Zealand, house prices in Sydney have now dropped by more than double digits (11.1%) from its peak in 2017.
This represents the largest drop in a single quarter since the global financial crisis in 2008/2009. Although this isn’t a significant drop when compared to the surge leading up to 2017, it is a clear sign that growth is finally losing steam.
Does this make housing any more affordable?
Not necessarily.
One of the largest contributors to the growth was access to credit, which has recently been restricted. The Australian Prudential Regulation Authority (APRA) introduced restrictive measures early in 2018, which saw interest-only loans approvals fall more than 50 percent (approximately $70 billion) in June 2018.
According to finder.com.au, a financial services comparison site, there are more than 900,000 interest only mortgages due to expire in January, where outstanding loans are set to revert to principal and interest, adding to the cost of home owners.
It’s not different this time, with any markets there are always peaks and troughs.
The question is how low will it go?
2019 is going to be the most exciting year for the real estate market, we will most likely see more developers become insolvent, we will see speculators lose interest (as they already have in certain markets) and we will see the result of building unaffordable NEW houses that were never really needed.
The Aussie dollar recently fell to a decade-low of 67.49 US cents. I wonder what’s happening in Canada?
Disclaimer: No products, services, investments or strategies are endorsed in this article. All opinions, news, research, tools, prices or other information is provided as general market commentary and communication — not to be taken as investment or financial advice. Any person acting on any information, does so entirely at their own risk.
