In AMP Capital’s weekly market update, chief economist Dr Shane Oliver noted that recent CoreLogic data has shown a further decline in property prices in October.
“Auction clearance rates in Sydney are now falling towards levels around 55 per cent that are normally associated with price declines on an annual basis and we expect Sydney home prices to fall around 5–10 per cent over the next year or so,” Dr Oliver said.
CoreLogic’s latest figures, released this week, revealed that a clearance rate of 67.4 per cent was recorded, an increase from previous weeks.
However, Dr Oliver has pointed to a long-term trend that may suggest that Sydney housing prices have passed their prime.
“Residential property prices in Sydney and Melbourne look to have peaked, with a slowdown likely in the next year or two.”
The economist has also noted that Sydney’s and Melbourne’s property market trends have not been replicated in the country’s other major cities.
“Across Australia, though, the picture is very mixed: Perth is showing signs of bottoming; Adelaide, Brisbane and Canberra are seeing moderate growth; Melbourne is cooling a bit; and Hobart is rising solidly,” Dr Oliver added.
He has also predicted that the RBA will keep the cash rate at 1.5 per cent for the sixth consecutive month, partly attributing his prediction to a slowing housing market.
“The RBA’s forecasts for stronger growth, along with solid business conditions and employment growth, argue against rate cuts, but ongoing low inflation, record low wages growth, uncertainty around consumer spending as highlighted by very weak retail sales, signs that the housing cycle is slowing and the still strong [Australian dollar], argue against a rate hike.”
The RBA will announce its cash rate decision on Tuesday, 7 November.