Sydney prices set for a minor correction: Moody's
Sydney apartment and home values are set for a minor correction, according to the CoreLogic-Moody’s Analytics Australian Home Value Index Forecast, 2017Q1.
The report predicts detached home values are expected to decline 1.4 percent in 2018, with apartment prices will likely fall 1.2 percent.
According to the report, Sydney's strong local economy has been the key driver of real estate demand.
"The labor market is approaching full employment, with a jobless rate of 4.7 at the end of 2016," it said.
"Furthermore, rents have stabilised after a drop in the first half of 2016.
"Sydney’s rental prices grew 1 percent over the month in January. Overall, detached-home and apartment prices in the city are expected to increase 7.2 percent and 7.5 percent in 2017 respectively.
"But prices are set for a minor correction.
"Detached-home values are expected to decline 1.4 percent in 2018, while apartment prices will likely fall 1.2 percent. Although we do not expect a steep decline in prices, Sydney’s property market will likely stagnate through to 2020 as interest rates begin to normalise.
"The degree of correction will likely be uniform across apartments and detached houses. Although the stream of oncoming apartment supply has accelerated—more than 150,000 apartments have been approved compared with 70,000 detached houses being approved—unit prices have grown more slowly than detached-home values.
"From 2013 to the end of 2016, apartment values have risen 46 percent, but those for detached homes have jumped 67 percent."