Conditions in Sydney and Melbourne are starting to swing in favour of homebuyers over the past few months, with the latest report by PRD Real Estate calling the two cities “opportune markets”.
The report found that median property price growth slowed over the last six months in Sydney and declined in Melbourne compared to the previous six-month period.
On an annual basis, the two cities also recorded lower average vendor premiums. At the same time, more options were available to buyers who are looking for the most affordable properties.
Sales down, prices still up in Sydney
Median property price across Sydney Metro increased by 5.6% for houses to $1.97m and by 0.9% to $882,000 for units over the first three months of the year.
However, sales between the first quarter of 2021 and the first quarter of 2022 declined in both housing segments, down by 9.6% for houses and 11.7% for units.
“The Sydney metro market still shows growth, however at a much slower pace than before and fuelled by an undersupply,” the report said.
It is noteworthy, however, that a total of $10.6bn worth of projects that include mixed-use and residential development are planned across the first half of 2022, which could help replenish the supply in the city.
“Key indicators show the market is experiencing a turn. Furthermore, the economy is entering a new phase of a higher cash rate and less fiscal and government stimulus — thus, now is the time to transact,” the report said.
Melbourne swings slightly to higher level of affordability
Over the first three months of the year, median prices in Melbourne declined by 1% to $1.14m for houses and by 0.8% to $630,000 for units. On a yearly basis, sales declined by 10% for houses and 7% for units.
The PRD report said these indicate that the Melbourne Metro market has taken a turn in price growth, providing more affordable conditions to potential buyers.
“Demand, in particular for houses, has slowed, which creates an opportunity for first-home buyers,” it said.
For the first half of 2022, a total of $25.5bn worth of projects, most of which are focused on commercial plans and infrastructure, are expected to commence.
“This will create local jobs pre and post construction, which, along with international borders opening, can translate to a revival in housing demand,” the report said.
Brisbane, Hobart outperform big cities
Brisbane outperformed Sydney and Melbourne in terms of price growth during the recent months.
In fact, median property prices in Brisbane increased by 28.2% for houses to $950,000 and by 5.8% for units to $489,000.
Interestingly, sales also declined in the city, which could be explained by several factors including the worsening affordability.
“An undersupply is evident in Brisbane Metro’s house market, as median price growth is alongside lower sale volumes,” the report said.
However, Hobart eclipsed not just Sydney and Melbourne but also Brisbane — prices in the city went up by 25.5% to $828,5000 for houses and by 17.3% to $610,000 for units.
“To secure their dream properties Hobart buyers need to offer the highest average vendor premium when compared to other capital cities, for both houses and units,” the report said.
“This has been a consistent pattern for Hobart over the past 12 months and comparatively, other capital cities are seeing a declining pattern in average vendor premium, or a swing towards average vendor discount.”
Photo by @brucemars on Unsplash