Sydney's cyclical property price downturn quicker than normal: BIS Oxford

Sydney's cyclical property price downturn quicker than normal: BIS Oxford
Sydney's cyclical property price downturn quicker than normal: BIS Oxford

The fall in Sydney real house prices is close to hitting its average downturn decline at only halfway through the average downturn cycle, a BIS Oxford Economics study shows. 

The average downturn for Sydney house prices is 14 quarters and the current downturn has progressed through six quarters to December 2018.

But real median prices – after taking out the effects of inflation – are already down 16 per cent, which means Sydney could potentially see the total real price decline exceed the typical downturn of 21 per cent. 

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Sydney's cyclical property price downturn quicker than normal: BIS Oxford

"So far, the period of decline in these two markets has been much shorter than the longest downturn duration and around half of their respective average downturn lengths in both the house and unit markets," said BIS Oxford Economics' Angie Zigomanis who analysed five cycles since 1965.

"It is foreseeable that the current downturn in the Sydney and Melbourne markets may have at least another year to run before reaching the cyclical trough."

However he suggests the likely scenario was a flattening of prices at the end of the year, without an immediate upward recovery.

The 1980s downturn saw 34 per cent price drops over 23 quarters.

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Sydney's cyclical property price downturn quicker than normal: BIS Oxford

Zigomanis noted that inflation in the 1980s was higher, causing more volatile price swings whereas lower inflation now could curb deep movements.

The Sydney apartment cycle mirrors its house price cycle, with real prices down 13 per cent at the halfway mark. 

Melbourne was experiencing a more moderate price fall than Sydney, the report published by Nine Entertainment said.

Real Melbourne prices have fallen 14 per cent in six quarters compared with the historical average of 15 per cent over 11 quarters.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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Bis Oxford Property Downturn

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