More cracks appear in Sydney's property market

Sydney's property investors enjoyed years of high gains. But things are changing…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Many investors in Sydney's property market have made a fortune over the years as Australia's biggest city rose to become one of the world's most expensive.

But more cracks are starting to appear in Sydney's property market.

Data from CoreLogic shows that the New South Wales capital city's house value dropped by 0.6 per cent over the past month and dropped 0.4 per cent in a week.

As a result, Sydney's house price growth has decreased to 1.9 per cent over the past year.

Those figures mean 2017 was the weakest calendar year for value growth since 2012, according to CoreLogic.

Sydney property investors weren't the only ones to suffer according to CoreLogic head of research Tim Lawless.

"From a macro perspective, late 2016 marked a peak in the pace of capital gains across Australia with national dwelling values rising at the rolling quarterly pace of 3.7 per cent over the three months to November," Mr Lawless said.

"In 2017 we saw growth rates and transactional activity gradually lose steam, with national month-on-month capital gains slowing to 0 per cent in October and November before turning negative in December."

Melbourne's house prices dropped by 0.1 per cent over the past month but prices in the Victorian capital are still up around 8.4 per cent over the last year, far outpacing Sydney's rate of growth.

The value of houses in Brisbane, Perth, and Adelaide remained flat over the past week, according to CoreLogic.

Data from the Real Estate Institute of New South Wales also demonstrates signs of a slowdown for Sydney's property market.

"Sydney's annual rate of growth is now tracking at just 3.1 per cent, compared to the peak of 17.1 per cent seven months ago," the Institute stated.

"Despite the reversal in growth rates since August 2017, Sydney dwelling values remain 70.8 per cent higher than their cyclical low point in February 2012."

Sydney also continues to see an increase in the number of properties advertised for sale with volumes 26.5 per cent higher than a year ago, the Real Estate Institute of New South Wales stated.

And auction clearance rates fell 60 per cent for the final eight weeks of the year, much lower than a year ago, according to the Institute.

Amid the news of a dwindling real estate market companies affected by property price fluctuations, such as McGrath Ltd (ASX: MEA), Asia Pacific Data Centre Group (ASX: AJD) and LandMark White Limited (ASX: LMW), all saw their share prices drop on Monday.

Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »