Homeowners stay put in slumping market

The stagnant state of Sydney's housing market is evident in the first quarter 2007 property data just released by the Real Estate Institute of New South Wales.

The volume of house sales declined in both Sydney and Wollongong with Newcastle the only urban centre to experience a slight upturn. Overall, house sales in NSW were down by 6.8% for the period. Meanwhile, property prices fell by 2% in Sydney and grew only 0.2% in NSW as a whole.

“Houses in lifestyle suburbs appear to be the winners,” says REINSW President Cristine Castle. “The older, more settled areas with good public transport infrastructure, perhaps a ferry, have held up. Although the pattern across the city is unpredictable it does seem that homes near water and with easy access to the city are proving popular.”

The highest turnover was in Blacktown where a 1.7% fall in the median house price to $403,000 brought in the buyers. Elsewhere, the decline in sales was spread throughout the city from the top tier suburb of Mosman where they fell by 18.7% to Penrith in the south west where turnover plummeted by 30.7%.

Similarly, the decline in house prices was not confined to particular suburbs but was experienced city-wide. Property prices in Mosman, Randwick and Burwood all fell as well as in most of the outer west. However, they picked up in areas such as Hunters Hill, Drummoyne and Lane Cove, lifestyle suburbs that offered comparative value for money.

“Again the older, more traditional suburbs were the ones that unit buyers favoured,” says Mrs Castle. “It is about people staying with the tried and tested. Access to good public transport, the water and other lifestyle factors is what people want.”

Historically low vacancy rates resulted in an extremely tight rental market, with available vacancies not moving much above 1% in the inner city. Rents were on the rise as demand outstripped supply.

“Until we see investors encouraged back into the property market we won’t see an easing of rental conditions,” says Mrs Castle. “The State Government has the option of making it more attractive to invest and it will be interesting if they do anything about this in the next Budget.”

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