Economists are forecasting that Sydney’s property market slump will last at least another two years because of tighter lending, sparking claims that Sydney is now at the epicentre of Australia’s housing market downturn.
A Bloomberg survey of 15 economists found that only three of the 14 economists who supplied a time frame said prices in Sydney will begin to rise again in under two years. The rest forecast it would be at least two years before any price increases. And most suggested property values would flatten after 2020 rather than rebound.
The economists forecast falls of 10 per cent compared to 5 per cent for the country as a whole. Some even predicted price falls of 15 per cent.
“Given regulators’ desire to see stability in the house price-to-income and debt-to-income ratios, we think it will be some time before house prices start to move again,” Sally Auld, chief economist for Australia at JPMorgan Chase & Co told Bloomberg.
Other economists said households facing tougher conditions made them less likely to invest in property.
“In addition, households face a number of headwinds –- including weak wage growth, higher utilities prices and an already high debt burden”: National Australia Bank Ltd. chief economist Alan Oster told Bloomberg.
