Eighteen months ago I started gathering information from Domains property research in an effort to better understand the current market situation. I listened to many industry and financial experts discuss this information and make seriously inaccurate statements about the condition of the Sydney market place.
The discussion in property has been based around the medium prices being paid in Sydney and its unparalleled growth. Or so it seems. The data reflected growth in medium prices. The above data shows that the average prices have in fact fallen over the last 6 months by comparison to last year. In fact over the last two months the difference in the average price has fallen by almost 35%.
How is this possible?
The medium price does not accurately express the value of the market place only the middle number. In fact from figures provided by Domain the total value of sales in the last two month period were $3.2 billion whilst twelve months ago there was $4.4 Billion dollars in sales recorded. The total number of sales in this period were almost the same – so where did the value go if in fact the medium price remained the same.
Less value in total sales within the same volume activity suggests falling prices. With falling sales value we are seeing less money in the residential market place.
Comments by Reserve Bank assistant governor Michele Bullock last week reflected an opinion which I highlighted in a previous article. The strength of the Australian residential market place is predicated on ownership not speculation. The level of investment and speculation that has occurred over the past four years in the Sydney residential market place is cause for concern and this may only be the tip of the iceberg.