AMP Capital chief economist Shane Oliver says “the drip feed of negative news” around the property market in Sydney and Melbourne is continuing to mount and believes prices could soon start to fall.
Surging unit supply, bank rate hikes, tightening lending standards, reduced property investor tax deductions, and ever tighter restrictions around foreign buyers appear to be taking their toll on the housing markets of Australia’s largest cities.
“Our view remains that home price growth has peaked in Sydney and Melbourne and that price declines lie ahead, particularly for units,” Mr Oliver said.
“The extent of the unit construction boom in Sydney is highlighted by the residential crane count which has increased from just 62 in September 2014 to 292 in March,” he said.
AMP Capital expects today’s building approvals data from the ABS to show a 3 per cent gain after a sharp fall in March.
Mr Oliver predicts CoreLogic’s data, out Thursday, will show a further moderation in home price growth.
In April, the combined capital cities recorded a 0.1 per cent increase, a significant reduction in growth compared to the previous nine months.
“Normally we’d be seeing values rise by between 1 and 2 per cent,” CoreLogic’s Tim Lawless told Mortgage Business. “What has really drawn that growth figure down is a reduction in growth rates in Sydney in particular. Sydney’s growth rate was essentially flat over the month of April,” he said.
If the market is not moving through the peak now, Mr Lawless believes it is “just around the corner” considering the maturity of the growth phase and the magnitude of property price growth in Melbourne and Sydney over the last five years.
Late last month investment bank UBS advised that it was "ringing the bell" and "calling the top" of the property market, predicting prices to "correct but not collapse".