Sydney’s property market boom may be over but house prices remain high

Sydney’s housing boom has finally reached its peak, but don’t expect house prices to start falling any time soon.

Property pundits said lofty prices, waning demand from investors and an increase in the supply of homes for sale would drive the slowdown but prices would remain steady.

The city’s median house price has already increased more than $80,000 since the start of the year, largely ­fuelled by low interest rates, but that pace of growth was unsustainable, Core Logic analyst Cameron Kusher said.

“The market is already starting to slow and it will slow further as it becomes harder for investors to get loans,” Mr Kusher said.

Investors accounted for roughly half of Sydney housing purchases this past year, implying recent APRA ­restrictions on loans to investors could have a major ­impact on demand.

Harris Partners agent Peter O’Malley said Sydney’s housing boom was already well into a “consolidation phase” of lacklustre growth and the market is weaker than many indicators suggest.

Roughly 80 per cent of homes that went to auction in the past eight weeks sold under the hammer, according to Core Logic figures, but Mr. O’Malley argued that this percentage was skewered by agents who deliberately withheld poor results.

“If data shows eight in 10 homes going to auction are selling, no one wants to be the agency that’s only selling five in 10,” Mr O’Malley said.

“This has encouraged some agents to withhold bad results so their numbers look higher and they can attract more clients.”

He estimated auction clearance rates in some suburbs could be closer to 65 per cent, still a high figure.

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Real Estate Institute of NSW president Malcolm Gunning said some agents had not adjusted their advice to clients.

“The market is going to flatten, but not all agents are telling their clients this. Those clients are still expecting big results like we were getting in the first half of the year but the market has changed. Buyers are much less bullish,” Mr Gunning said.