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 "The property market tide is in ebb. The introduction of new taxes for NSW investors has added additional pressure to an already slowing Sydney property market." - Mark |
| No early exit from housing price slump |
| By Florence Chong |
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May 27, 2004 HOUSE prices in Sydney and Melbourne suffered a dramatic drop in the first three months of this year, according to Australian Property Monitors. The firm's director of research, Louis Christopher, said yesterday there was now more than a 50-50 chance of a 20 per cent fall in prices this year. According to the firm, Sydney house prices dropped by 7.5 per cent – a 16.5 per cent turnaround from a rise of 9 per cent recorded in the December quarter. Melbourne suffered a turnaround of 22.8 per cent – from a rise of 10.3 per cent in the December quarter to a contraction of 12.5 per cent in the March quarter. Brisbane and the Gold Coast recorded a drop of 1 per cent and 1.3 per cent respectively. Perth and Canberra remained constant, while Darwin prices rose 9.4 per cent. Mr Christopher said falling house prices combined with the lowest auction clearance rates since the last housing downturn in the 1990s indicated a worsening housing market. Three weekends ago Sydney's house auction clearance rate dropped to 35 per cent. "This is not a once-off. Clearance has stayed low consistently," he said. The assessment is consistent with that of investment bank JP Morgan, which said in a recent report that Sydney house prices were poised for a 20 per cent fall to reach "fair value". Barring a cut in interest rates that could cause a rebound, Mr Christopher said the residential market would remain weak for the next couple of years. "We don't know how long the market will stay down. In all likelihood this is not a short-term phenomenon," he said. "At the very least, we think it will stay weak to 2005." He was not confident of a rapid recovery because the level of affordability was lower today than the mid-1980s. Reference: The Australian 
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