With the end of the spring selling season and changes in banking policy, the housing market in Sydney has finally begun to cool down.
With an auction clearance rate of 82% to 84% for the past few weeks, it is now at 81% for the weekend, according to Corelogic, or 79%, according to Domain. The drop stems in particular from a drastic reduction in auction sales in the western suburbs, with Parramatta’s clearance rate dropping from 80% to 66%, and the southwest region down from 70% to 54.6, also due to lower auction volumes.
There are also further concerns that another blow to the market could come with the higher benchmark assessment interest rate for banks enforced by the Australian Prudential Regulation Authority
(APRA). With NAB, Westpac and ANZ all increasing the assessment rate for expatriates with foreign-sourced income, Ren Wong
, chief executive of N1 Holdings, said this could “deliver another blow to the market similar to the one that accompanied a clampdown on investor lending.”
"In the longer term, the assessment rate will impact the market because people with the same level of income are able to borrow less than a couple of months ago, and this will have the same effect as APRA's decision to cap investor lending at 10 per cent,” he said. “It's another tightening measure to cool the market."
Meanwhile, Westpac has rejected a client looking to buy a unit in Jannali due to the property having “too many mortgages”, according to Bill Moses of Century 21. There have also been a number of auctions withdrawn or not cleared in nearby areas such as Auburn, Riverwood, and Revesby, located west and southwest of Sydney.
However, Parramatta is still performing well, particularly its off-the-plan apartments. Over the weekend, a record price of $3 million was paid by Bob Reiman for a penthouse in Coronation Property’s new tower at 8 Phillip Street.
Other sales include 108 apartments at Opera Residences at Circular Quay and 10 of the final 30 apartments of Platino’s Chatswood Place. In Kurraba Point, a four-bedroom apartment sold for $5.4 million. Sydney’s north shore continues to perform strongly, going as high as 90.2%.
The unit market is expected to undergo a shift starting 2017, according to Scott Smith of Smith Property Agents. “The market in the eastern suburbs won’t change but there will be changes in the unit market in 2017 particularly for one bedroom and studios,” he said.