Prices continue to cool in capital cities
Buyers worried about being priced out of the market can breathe a little easier. Data shows that more people are buying, yet prices are cooling, a great result for anyone looking to buy a house in Sydney.
Figures show that April marked the fourth consecutive month of gains for new home sales, with private sector new home sales seeing a rise of 2.9 per cent.
"A healthy April for new home sales provides a promising start to the June 2014 quarter," said HIA Chief Economist Harley Dale.
Meanwhile, the latest RP Data - Rismark Home Value Index shows that over the month ending May 31, capital city dwelling values fell 1.9 per cent. This marked the first monthly decrease in home values since May of last year.
"Outside of the seasonality factor, we have been seeing signs that the housing market is approaching the peak of the growth cycle," said RP Data Research Director Tim Lawless.
"The rolling quarterly rate of growth peaked in August last year and we have been seeing weaker auction clearance rates since late February."
The auction clearance rate in Sydney was trending over 80 per cent for several months but is now slipping back a little further in the 70 per cent range.
Some observers, such as CommSec Chief Economist Craig James, attributed this decline to the federal budget announcement. The tough budget has certainly put a dent in consumer confidence as some buyers are fence-sitting at the moment.
Whatever the cause, this news should be met with joy from prospective home buyers, particularly those in New South Wales. Sydney was ranked as the most expensive city by the index, featuring a median dwelling price of $678,500.
While decreases in property values in Sydney and other capital cities won't reverse the gains seen last year, they do show that the market is becoming calmer, offering a nice change of pace from the frenetic activity seen over the past 12 months.
I still expect to see some further growth in the Sydney property market as low interest rates make mortgage repayments more affordable and continuing demand from upgraders and downsizers. Sydney is always under the pump from the over-riding undersupply situation.