Australia's record housing bonanza that's turned Sydney and Melbourne homeowners into millionaires FINALLY ends - so when should you sell and how long until you can grab a bargain?
- Property experts are announcing the end of Australia's enormous property boom
- Sydney and Melbourne saw property prices drop during the September quarter
- Buyers are being warned to stay out of the market for at least the next six months
- A real estate expert has issued a dire warning for house prices in Sydney's west
Published: 16:43 AEDT, 13 December 2017 | Updated: 08:29 AEDT, 14 December 2017
It comes after a weekend where the clearance rate for homes put up for auction fell to just 58 per cent, a drop from 73 per cent at the same time last year.
And now experts in the industry are claiming the bubble has finally burst, warning buyers to now sit tight for at least the next six months until things calm down.
One of the biggest property booms in Australian history is over, with real estate experts now telling prospective buyers not to enter the market in either Sydney (pictured) or Melbourne
This four-bedroom mansion in the Sydney suburb of Hunters Hill was initially listed at close to $6 million, but its owners were forced to settle for just $4.8 million in 2017.
Auctioneer and real estate expert Robert Klaric, who has worked in Sydney for more than 30 years, says he's finally willing to declare that the boom is done.
'I'll call it and say it's over,' Mr Klaric told Daily Mail Australia.
'It's been by far the biggest and sustained boom I've seen. Really since 2012 its been a steady increase, with the biggest growth in the last three years.
'But from next year it will be an adjustment to a sustained market at 10 per cent or so lower... from about July there'll be a smorgasbord of cheap properties to pick from.'
On Monday the ABS released statistics showing property prices fell by 1.4 per cent in Sydney alone during the September quarter.
This is the first time prices have gone backwards in Sydney since early 2016.
In Melbourne, property prices increased by seven per cent, just half the rate they increased in 2016.
According to Shane Oliver, AMP's chief economist, it's confirmation the seemingly never ending growth in the property market has come to an end.
'I think the boom is certainly over, but in saying that, it mainly relates to Sydney and Melbourne, where the boom has been,' Mr Oliver told Daily Mail Australia.
'In Sydney, the bubble has well and truly been pricked... and the ABS data today has well and truly confirmed that we're seeing price declines.
'Melbourne is a little bit stronger, it does seem to be following Sydney down, but it's getting a bit of support from a higher population growth.'
At its peak the property boom led to homes across Sydney rising in price by as much as $370,000 in under two years.
But home owners have found it harder to sell recently, with one particular home in the Sydney suburb of Hunters Hill taking almost 200 days to sell.
When the owners did find a buyer it was at $4.8 million, a massive drop down from the initial asking price of almost $6 million.
Describing the housing markets outside the nation's two biggest cities as 'messy', Mr Oliver said he would also be advising potential buyers to bide their time.
He predicts it will be up to 18 months before prices rise again, but can't see a severe housing crash on the horizon.
'Are we going to have a crash? Probably not, unless we have higher interest rates or higher unemployment it's hard to see a crash coming,' he said.
'I think it's just another correction in the property market. In 2005, 2008 and 2012 we saw declines in Sydney so it's probably just correcting itself which I think is healthy.'
Perth, Darwin and Canberra also experienced falls in property prices last quarter as Brisbane and Adelaide saw slight increases.
While the facts are seemingly clear, Mr Klaric says many real estate agents are still refusing to admit it's over.
'The numbers coming out are shrouded in secrecy, but the one thing that never lies is the auction clearance rate,' he said.
WHEN SYDNEY WAS BOOMING:
- A four bedroom home at Narraweena sold in 2017 for $1.7 million, less than two years after selling for $1.35 million in 2015.
- Also this year, a two-bedroom unit at Freshwater was sold for $950,000 just three years after being bought at $645,000
- In 2017 a three-bedroom home in Marrickville sold for $1.2 million. It had last been sold for £300 in 1915.
- A fire damaged home in Redfern sold for $1.6 million in April this year, having fetched $275,000 when last sold in 1994 - an almost 600 per cent increase in the past 23 years.
- A waterfront home in Watsons Bay sold at auction for $14.2m in October this year, having been valued at $950,000 in 1993
Source: Mario Esposito, McGrath Estate Agents - Dee Why
'On Saturday it was 58 per cent... while the actual figure is probably a lot lower, but agents are not giving actual figures.
'Agents say 'we're still negotiating' or 'the clients don't want to disclose', when it's actually the agents who don't want to disclose because they've passed it in.'
A total of 249 properties were passed in at auction over the weekend, while 130 were withdrawn beforehand.
Mr Klaric believes the end of the boom will lead to a change in thinking on investing and is predicting that could be disastrous for Sydney's west.
He says people have already moved away from buying off the plan and are searching for a lifestyle, something he said will keep city prices steady.
'People now want specific locations with lifestyle and infrastructure. If areas have got that then the impact won't be as brutal,' he said.
'If you said I want to live in Sydney, or in Bondi, Mosman, Manly or Chatswood, they all offer a lifestyle and infrastructure to get to the city, so they will adjust.
'But out in the west we could see absolute carnage.'
Mr Klaric is advising his clients to steer clear of the market, saying if they wait at least six months they could snag a bargain.
'The market's been playing by the FOMO (fear of missing out) process and the reality is it was flamed by the real estate industry and the media,' he said.
'Now's the time to just sit back, relax and watch, because from about July next year it will be a smorgasbord to choose from at a discounted price.
'Renters will also get a lot more new properties coming onto the market and there is going to be a glut of units in the market.
'If you're looking to rent a two-bedroom apartment within a 10-15 kilometre radius of the city there will be a heap of options all a lot cheaper than they are now.