The real estate industry is currently in the midst of a slowly deflating property bubble, according to recent research by an economics professor from one of the country's top universities.
Recent government data showed that property prices across eight capital cities were down 0.7% in the first quarter of 2017. Sydney recorded the largest drop, with prices dipping by 1.2%. Melbourne and Brisbane saw 0.6% decline while Perth’s prices decreased by 0.9%.
This resulted to dejected home sales and low demand for new properties. “Fewer people are trying to sell their residential properties. Those that try are having less success in doing so. Those that do succeed are getting lower prices,” Richard Holden of the University of New South Wales said in an article published on The Conversation.
In comparison to the same period last year, price declines were minimal, and rates were even up at times. It can be recalled that Sydney prices only sank by 0.5%. Melbourne prices, on the other hand were up and robust at 6.2%. Brisbane grew by 1.6% annual growth and Perth fell by 1.5%.
Clearly, the housing market is at a low, and there is no assurance if price depletion will continue or a surge will suddenly happen. Holden, however, emphasised that a significant change in property prices would “require a major trigger,” which is most likely to come from interest-only loans.