Houses In Sydney Are Falling Fast Because Of Great Supply

The Reserve Bank deputy governor said that the prices of homes in Sydney appear to be declining at a fast rate because the supply has increased in the property sector.

Philip Lowe said that he would readily welcome a drop in the housing prices in Australia. According to an investment bank group, the prices of houses have peaked and are expected to fall by about 7.5 percent in the next two years. The experts are expecting that the prices will start to drop during March next year and will continue the decline until mid 2017. It will be then that the market will once again pick up its momentum. Economists noted that the recent data which includes credit growth, house prices, auction clearance rates, dollar value of the settlements as well as its volumes are now showing signs of slowing down from its lofty levels. Looking at the different indicators, it will appear that the peak in the current housing cycle has already been reached.

There are now signs emerging that home loan approvals are slowing and that experts are expecting the demand for home loans to bottom down in 2018. The note also said that economists are expecting the housing credit to hits its bottom at just 3 percent three years from now. The falling demand for the credits when it comes to the housing market and the falling prices of houses will in turn make the banks lower their profit forecasts by about 1 to 4 percent in the next 2 to 3 years. The most affected banks will be the National Australia Bank and the Commonwealth Bank. They will be the most affected by this decline in the market since they have higher lending to investors of real estate properties.

The demand for mortgages coming from the property investors has dropped as well after the banking regulator required the banks to cap the lending of their investors to just an annual growth rate of about 10 percent. So where will the renovation companies Perth stand in with these issues arising? Economists and housing experts have to thoroughly evaluate things in order to supplement decision making of the players in the market.