Recent Home Living Property Culture The Team North Shore Living
Recent Home Living Property Culture The Team North Shore Living


Written by Property Analytics

Photo by Alex Wong (Unsplash)

Over the last four years, Sydney home values have increased by nearly 50% (Core Logic RP Data). Many factors have contributed to this growth – unusually low growth in preceding years, record low interest rates, stable employment, high immigration, a falling exchange rate, etc.

All of the above factors remain, yet growth has peaked and is starting to slow. Ending March 2016, property prices were up year-on-year by about 7%, compared to nearly 12% ending December 2015. To better understand this changing market, it’s worth looking at who is doing the buying.

Since 2012, the number of people borrowing to purchase, build and/or renovate has steadily increased. Rising lending activity is a sign of increasing buyer demand, and more demand generally leads to growth in property values.

But a deeper examination of the type of lending suggests some cause for concern. From the back half of 2013 to the middle of 2015, investors accounted for about 40% of all lending commitments (the highest on record). In recent months, investor lending has decreased significantly, as have the number of total residential sale transactions.

The lending mix has changed in recent times, and points to an emerging shift in buyer demand. In a good sign for the overall health of the market, total lending (owner occupier + investor) is up year-on-year; but investor lending has been shrinking as a proportion since the middle of last year, and has been falling year-on-year in real terms since September.

These lending figures are sourced from the Australian Bureau of Statistics – they show things at a national level, so they won’t apply perfectly to Sydney market conditions. But they do suggest we’re moving away from a market characterised by speculative investment, and towards a more balanced market in which owner-occupier activity will drive prices.

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