The latest CoreLogic house price data for the month ending October revealed another strong quarter of growth for the Melbourne and Hobart markets, while Sydney, Perth and Darwin continue to head lower.
Sydney's property owners won't be too disappointed given the city has experienced a 5-year property bull market since 2012 that has produced average dwelling value gains of 75 per cent.
The growth has been supported by an interest rate cutting cycle that has left base lending rates at a record low 1.5 per cent and buyers borrowing limits sky high.
If interest rates have bottomed it's likely Sydney's property boom is over, with an outlook for flat returns over the years ahead.
The bear case scenario is that Sydney follows Perth and Darwin into a 4-year property bear market after bubble like prices burst for different reasons.
Property prices in the mining capitals have fallen since 2014 on the back of the mining super-cycle ending and CoreLogic's Tim Lawless noted that Sydney has just joined them as the only cities to be posting quarterly property price falls.
Sydney is not exposed to a mining bust, but its exuberant property prices are exposed to other changing macro-economic conditions. Over the quarter Sydney dwelling prices fell 0.6%, while Perth and Darwin shed 0.7% and 4.4% each.
Nationally quarterly house prices edged 0.3% higher, with Melbourne delivering annual house price growth of 14.3%.
If Melbourne kept at that rate of compound annual growth a $1 million property purchased today would be worth $4.14 million in just 10 years' time!
Property is likely to remain a good investment in Australia over the long term, but it seems Sydney is facing some short-term falls at least.
While for stock market investors house price pain knocks consumer confidence and is already hammering the retail sector. Today department store operator Myer Holdings Ltd (ASX: MYR) reported same store sales were down 2.1% for the quarter ending October 2017.
