Sydney’s rapid growth cycle appears to be over with auction clearance rates plummeting and prices flatlining over September, new data shows.
Property prices in the harbour city grew by just 0.1 per cent in September, according to CoreLogic RP Data figures released on Thursday.
At the same time Sydney’s auction clearance rate tumbled from 73.9 per cent in August to 69.9 per cent over September, Domain Group data shows.
Domain Group’s senior economist Andrew Wilson said this significant drop in auction clearance rates across Sydney meant a sharp decline in the rate of prices growth was expected.
In the June quarter Sydney house prices grew 9.8 per cent – the fastest rate ever recorded by the Australian Bureau of Statistics.
“Never say never, but never will we see the rate of growth Sydney has seen [in the June quarter] again,” Dr Wilson said.
CoreLogic RP Data put the most recently quarterly growth at 4.6 per cent.
The sub-70 per cent clearance rate was the lowest September result since 2012 and was in stark contrast to May when rates across the city hit an all-time high of 83.3 per cent.
“The high volume of listings will continue to test the Sydney market,” Dr Wilson said.
House values faired poorly over the month, dropping 0.2 per cent, while apartment values increased 1.1 per cent, CoreLogic RP Data’s head of research Tim Lawless said.
”Vendors are still enjoying strong selling conditions, but it looks like buyers are slowly regaining some leverage in what has been a very hot market,” he said.
“With the first month of spring behind us, it is clear that housing-market conditions are being tested, particularly in Sydney.”
The city also had record low gross rental yields for houses and apartments, returning 3.1 per cent and 4.1 per cent respectively.
But Mr Lawless said while clearance rates were slipping, there were still signs that the private treaty market was “relatively resiliant” with low rates of discounting and homes selling in just 26 days on average.
Commonwealth Bank economist Diana Mousina said the slowdown for Sydney was overdue, having expected prices growth to wind down “from the middle of 2015, rather than nearer the end”.
“In general, the factors driving the housing market seem to be those putting pressure downwards rather than upwards,” Ms Mousina said.
These include tightening lending standards for investors, tougher serviceability tests and high levels of supply.