A Summary of Sydney and Melbourne's Markets

Sydney and Melbourne are seeing decreases while the rest of Australia is stable or seeing growth, why is this? There are a few factors causing this. In this post, we explore some of the reasons Sydney and Melbourne have been seeing decreases in their dwelling values as explored by Corelogic.

First off, we have the tightening of financial conditions. This has been more pronounced in the investment segment of the market. This has impacted Sydney and Melbourne on a greater level as these capital cities have recorded much higher concentrations of investment demand. Therefore, as investment activity reduced, the fallaway in housing demand is much sharper in Sydney and Melbourne.

Housing affordability constraints are more pronounced in these markets and rental yields are substantially lower. This indicates an imbalance between rental values and dwelling values.

The ramp up in housing supply in Sydney and Melbourne has also been more significant than other parts of Australia. This is in the face of lower demand from both interstate and overseas migration.

Additionally, Sydney and Melbourne have also been more affected by the reduction of foreign investment activity in Australia.

Because of less market activity, advertised listings have surged higher, providing buyers with ample choice within the market. This leaves buyers with greater power at the negotiation table regarding price.

According to Corelogic data, clearance rates have been tracking at a low 40% range, while private treaty sales are slowing substantially. Resulting in longer selling times and larger rates of discounting than Melbourne and Sydney have seen over recent years.