Brighter outlook for prices this year after slow start
Despite difficult circumstances, the Sydney housing market generally performed solidly last year.
After unsustainably strong price growth in 2009 and into 2010, and numerous interest rate rises, housing affordability and buyer confidence had tumbled by the start of last year.
The unemployment rate in Sydney began to rise by mid-year because of a slowing economy, and the boost from the resources boom failed to materialise as natural disasters at home and overseas hammered exports.
Weakness in the retail, tourism and manufacturing sectors added to a subdued economy. Seemingly unending streams of negative news from the global economy, particularly in regard to the European debt crisis, spooked the sharemarket from mid-year on.
Investors ducked for cover and consumer confidence collapsed as the dollar went on a rollercoaster ride.
The Reserve Bank came to the rescue by the year's end and consecutive monthly falls in official interest rates brought some relief to battered areas of the economy.
Despite all these headwinds, the Sydney housing market stood firm last year. Australian Property Monitors' data show the median house price in Sydney for the year to November 2011 was only 1.5 per cent less than the year ending November 2010.
The unit market was particularly resilient, with the median price rising by 1.1 per cent in the same period. Sydney was clearly the best performer of all the capital cities last year.
In Sydney, the best performers were the Canterbury-Bankstown area and the south-eastern suburbs, where the median house price rose by 5 per cent and 3.7 per cent respectively. The worst performers were the eastern suburbs and the northern beaches, where the median house price fell by 3.9 per cent and 2.5 per cent respectively in the year to November 2011.
Although the housing market generally proved to be resilient in 2011, there were signs that it had run out of puff by the end of the year. Auction clearance rates fell in December to their lowest for the year, despite the relatively large number of properties for sale every weekend.
The softening market in December was also despite a large number of first home buyers trying to buy before the stamp duty concession expired on December 31.
After a subdued start, this year will prove to be a year of recovery in the Sydney housing market, one driven by an improving national and local economy and also continued activity in the lower- and middle-price sections of the market.
The prestige market is set to remain relatively quiet, although some increased activity may become apparent by the year's end if there is a sustained revival in the stockmarket.
Overall, the Sydney median house price should rise by between 3 per cent and 5 per cent in 2012.
Dr Andrew Wilson is the senior economist for the Fairfax-owned Australian Property Monitors.
Source: domain.com.au
Written by: Andrew Wilson
Dated: January 15, 2012
