In addition to declining auction clearance rates, Sydney faces an immediate future of modest property price growth. The Australian Financial Review reports on new analysis from property valuation company Propell that projects a slower growth for Sydney homes as well as Melbourne. Sydney house prices are in for a bigger slowdown than Melbourne as both settle into a year of 5 per cent growth, property valuer Propell says.The modest pace of growth that Propell predicts in its September residential report for the next 12 months is less than a third of the 18.6 per cent rise in values have enjoyed over the past year. While demand remains strong, the slowdown is a reflection of the affordability problem of prices that have risen beyond the reach of many would-be buyers, said Propell head of research Linda Phillips. In Melbourne, the predicted 5 per cent growth is also a slowdown, but less of a fall given that city's more-modest 11.5 per cent increase in house prices over the past year.
Phillips reasons that Melbourne, with a median sales price about two-thirds that of Sydney, will be an attractive option for investors priced out of the New South Wales capital. Any potential increased interest in Melbourne may not translate into price growth for the Victoria capital, however. The publication notes that, due to oversupply issues, “20 per cent of Melbourne CBD properties are selling at a loss” currently, which should should place a drag on unit prices in the city. [Australian Financial Review]