The Sydney market is clearly heading south: Terry Ryder

A major Sydney newspaper headline proclaimed this week that “Sydney’s property market boom is finally over but house prices remain high”.

Well, exactly. Therein lies the problem.

The article went on to say: “Sydney’s housing boom has finally reached its peak, but don’t expect house prices to start falling any time soon.”

In fact, Hotspotting research indicates the Sydney market reached its peak in the December quarter last year and sales activity has been on a gradual decline since then.

It’s taken the market and the media more than half a year to realise what’s happening.

Analysts, economists, commentators and writers rely on movements in median prices to inform their view of property markets. The problem is that median price data is at least six months behind the game.

The alleged median price for Sydney is still rising, even though the number of sales has been fading, auction clearance rates have been falling and professionals at the coalface have been reporting an easing of competition and evaporation of the boom-time heat.

The market is clearly heading south but, according to the price data much-beloved by almost everyone, it’s still rising.

Market watchers should be observing sales activity. The number of sales happening in markets provide a much more accurate and timely picture of market trends – and they can predict price movements. 

This is the basis of the Price Predictor Index published quarterly by hotspotting.com.au. We chart sales volumes in every suburb and town in the nation.

And this is what it’s telling us:-

• The number of Sydney growth suburbs is one-third of the number six months ago.
• Regional New South Wales is rising and has twice as many growth markets as Sydney does.
• Adelaide and Brisbane have both overtaken Sydney and continue to rise (but you won’t know it if you rely on median price data).
• Melbourne has faded a little but remains more buoyant than Sydney.
• Regional Queensland has almost as many growth markets as Brisbane does.
• The strongest market region in the nation, now, is South East Queensland, with Brisbane, the Gold Coast and the Sunshine Coast all busy.
• There are also markets in serious decline and they’re all locations that previously rose with the resources boom and were oversupplied by over-zealous developers.

The sales volumes data shows that the pecking order in Australian real estate is changing – but it won’t show up in the median price growth figures any time soon.

Terry Ryder is the founder of hotspotting.com.au. You can email him or follow him on Twitter.