Sydney housing sentiment slumps further in May: UDIA Urbis Home Purchaser Sentiment Survey

Sydney’s outlook on housing dipped further in May, despite the easing of pandemic restrictions, according to the UDIA Urbis Home Purchaser Sentiment Survey.

The poll - carried out between May 7 and 12 - found that the proportion of residents feeling ‘very positive’ about the property market dropped six percentage points (to 21 per cent) compared with this time last year.

Overall, homeowners had a more pessimistic outlook than renters.

The proportion of homeowners who were positive about the market fell seven percentage points to 54 per cent over the year.

This was compared with just a two-percentage point drop among renters (down to 50%).

"The report shows a downward shift in sentiment since the last survey, with increased pessimism around purchasing property in the next 12 months," associate director of Urbis Kylie Newcombe said.

"The softening in sentiment was, however, relatively moderate, suggesting cautious optimism by prospective purchasers in the medium-term fundamentals of the Sydney property market.

Almost half of all Sydney residents also believe that house prices will drop in the next six months – more than double the number from a year ago.

Just over one in four believe prices will drop over the next 12 months – a seven percentage points rise compared with a year ago.

The city, and Sydney's east, saw the residents who were the most negative about the prospect of home prices, with 55 per cent expecting prices to drop over the next six months.

More than two-thirds said they were unlikely to buy a property in the next 12 months – a seven percentage points increase from July last year.

And 72 per cent said they were unlikely to buy in the next six months.

In more bad news for apartment developers, 61 per cent said they preferred free-standing houses compared with units or apartments.

However, the report noted that "it is not possible to conclude a relationship between COVID-19 and preferences.”

There was also a strong support for stamp duty reform as a tool to improve confidence among home owners and some renters.

Fifty-four per cent of renters said policies targeting first home buyers would have a positive effect on their confidence.

Given a choice, Sydney residents would like to live in Parramatta, Castle Hill, Chatswood, Blacktown and Balmain.

The poll surveyed 531 Sydney residents.