'The worst is over for some': Why the Sydney and Melbourne property markets will recover – but the news isn't so rosy for the rest of Australia
- CoreLogic's head of research said worst may be over in Sydney and Melbourne
- Both real estate markets have plunged by record levels since peaking in 2017
- Tim Lawless said strong auction clearances were a sign the bottom was reached
The worst may soon be over in the Sydney and Melbourne property markets but the rest of Australia may not be so lucky.
Since peaking in 2017, Sydney's median house price has plummeted by a record 17.4 per cent while Melbourne's corresponding values have dived by 14.8 per cent.
Real estate data group CoreLogic's head of research Tim Lawless, however, said better news on the auction clearance front was a sign the worst was nearly over in Australia's biggest cities.
'In Sydney and Melbourne, we're probably just around the corner of seeing those markets have bottomed out,' he told the ABC's 7.30 program on Monday night.
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Auction clearance has tipped that the worst was nearly over in Australia's biggest cities (stock image pictured)
Sydney's weekend auction clearance rate surged to 78.2 per cent, up from 50 per cent a year ago, with Melbourne not far behind on 70.3 per cent, marking the first sign of good news for sellers in almost two years.
In June, real estate values in Sydney and Melbourne also rose for the first time since they had peaked in 2017.
'We would like to see more than one month where values have edged a little bit higher, but the trend, absolutely, in those two cities has been one of progressively smaller declines, culminating in a smaller or a small rise in values over the month of June,' Mr Lawless said.
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'If we see the July data coming through with another positive result in those two cities, we can safely call the bottom of the market has passed.'
The Australian Prudential Regulation Authority's crackdown on interest-only and investor loans sparked the record downturn in those housing markets.
As of last week, APRA removed a requirement for lenders to model a borrower's ability to repay a loan with a 7.25 per cent standard variable mortgage rate.
The worst may soon be over in the Sydney and Melbourne property markets but the rest of Australia may not be so lucky (pictured is Rose Bay in Sydney's eastern suburbs)
Sydney's weekend auction clearance rate city surged to 78.2 per cent, up from 50 per cent a year ago, with Melbourne not far behind on 70.3 per cent, marking the first sign of good news for sellers in almost two years (pictured is an auction in Sydney)
The Reserve Bank of Australia has also cut interest rates to a new record low of one per cent.
Mr Lawless said Sydney and Melbourne were more likely than other parts of Australia to benefit from looser monetary policy.
'These are also the markets where unemployment is the lowest, so even though they are also the most unaffordable markets, they are also the regions where labour markets tend to be the tightest,' he said.
'That's probably why we are seeing Sydney and Melbourne responding to lower interest rates, some improvements in confidence following the federal election.
'It's not really flowing into other markets where economic conditions tend to be weaker.'
Mr Lawless was less upbeat about Perth, where house prices have plunged by nine per cent during the past year, in a market that has been in decline since 2014.
Darwin's median house price fell by 9.4 per cent in the year to the end of June.
In outback Queensland, real estate values have plummeted by a whopping annual pace of 37.2 per cent, with rural areas in southern Western Australia diving by 19.2 per cent.
'Outside of Sydney and Melbourne, generally values are still falling across most of the capital cities as well as the regional markets in Australia,' Mr Lawless said.
'This is really a story about Sydney and Melbourne levelling out.'
In June, real estate values in Sydney and Melbourne also rose for the first time since they had peaked in 2017 (stock image pictured)
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