How the experts predicted the Sydney property market in 2014!

APM chief economist Andrew Wilson told SmartCompany his five predictions for 2014.

1. House price growth to slow

Sydney and Melbourne were the hot markets in 2013, but this is set to change in 2014.

Wilson says house price growth peaked in Melbourne and Sydney in the December quarter last year.

“Sydney reached record-level price growth rates, the best in 10 years, and was overall very high by historical standards, but economic headwinds are blowing against medium-term growth in house prices now,” he says.

“The lower dollar will impact inflation, wage growth has slowed and this will impact living standards.”

Wilson says the level of growth reached in 2013 will be difficult to sustain.

“Markets will start well, there is still a lot of energy in the market, but this will moderate and we’re looking at likely growth rates of about half of what was achieved in 2013 in Melbourne and Sydney,” he says.

“There is more pessimism than optimism about the New South Wales and Victorian economies. The Sydney market will also have issues to do with affordability because of low income growth.”

And then going back to 24 April 2014, there were these comments;

House-price growth has slowed this year, leading analysts to suggest the Sydney property boom is over. Following house price growth of 5.1 per cent in the December quarter, Sydney prices grew by 3.1 per cent over the March quarter, according to Australian Property Monitors.

”We’ve passed the peak of the cycle, now we will see a moderation in house price growth,” APM senior economist Andrew Wilson said.

”Affordability barriers are starting to move into the market now … I think the boom is over.”

And then this from Shane Oliver AMP Chief Economist;

”I think we have seen the best of Sydney’s house price growth.

”Sydney probably has peaked in terms of momentum … affordability has been deteriorating.”

Have a look at these figures back then..

But wait, there’s more..

The Domain Group House Price Report for the September quarter released on Thursday confirms what auction clearance rate data has been indicating: the city has experienced the slowest rate of price growth since March 2014, at just 3.2 per cent.

Domain Group senior economist Andrew Wilson said this was “clearly a sign that the Sydney boom is over”.

He said the clampdown on investor lending by the Australian Prudential Regulation Authority had taken some heat out of the market.

“Nothing will slow a market more than higher interest rates and the enthusiasm of a bullish market has now started to wane,” he said.

Sydney’s median house price is now sitting at $1,032,422 – up 21.7 per cent over the past 12 months.

Have a look for yourself. https://www.domain.com.au/news/sydney-boom-is-over-as-buyers-start-to-gain-upper-hand-domain-group-20151020-gkdkbx/

The same article had this to say;

Domain Group senior economist Andrew Wilson said this was “clearly a sign that the Sydney boom is over”.

He said the clampdown on investor lending by the Australian Prudential Regulation Authority had taken some heat out of the market.

“Nothing will slow a market more than higher interest rates and the enthusiasm of a bullish market has now started to wane,” he said.

And then this;

AMP Capital chief economist Shane Oliver said Sydney was now in the early days of a low-growth period, with single digit increases going forward.

“This gives buyers more time to assess the market and make better decisions,” Dr Oliver said.

And then at the end of 2015, we see comments like this;

Sydney and Melbourne closed the year with growth of 12.8 per cent and 11.8 per cent respectively, according to Corelogic RP Data. Those numbers will be replaced by three per cent and one per cent in 2016, head of research Tim Lawless says. 

“Over the past three months we saw five of the eight capital cities record a decline in dwelling values, with Sydney down one per cent and Melbourne, 0.5 per cent,” he says. 

“We may see further declines during 2016; however, considering the high rate of population growth and stronger economic conditions in these cities, I’d be surprised if the fall was more than five per cent before conditions start to level.”

“The significant house price growth disparities between capital cities are set to converge though 2016,” Domain chief economist Andrew Wilson says.

See for yourself - https://www.domain.com.au/news/bad-hangover-expected-for-property-market-in-2016-20151229-glw4cx/

I have the upmost respect for all of these analysts, but even they should come out and at least acknowledge they got it horribly wrong.