Home owners told no need for 'panicking' amid Sydney property slump

Interest rate hikes and proposed property tax changes have created uncertainty in the Sydney market. (ABC News: John Gunn) Home values have fallen across Sydney, with buyer confidence low amid interest rate hikes and proposed property tax changes. Real estate agents say buyers have reduced their budgets by up to 15 per cent, and homes are taking longer to sell. Prices are expected to continue to decline, but a market crash remains unlikely. Link copiedShareShare articleSydney has been leading a national property market slump, with home values in the city falling 0.9 per cent in May, according to Cotality data released this week. Homes in areas most affected dropped in value between 1.4 and 2.6 per cent, with the median value for Sydney homes — including units — sitting at $1.28 million. It followed a months-long cool down topped off by multiple interest rate hikes and changes to negative gearing and capital gains tax announced as part of the federal budget. Industry experts suggest the trend could continue, but should home owners be worried about engaging with the market? The government is poised to make changes to negative gearing, the capital gains tax discount and the tax treatment of trusts. So how do they work, and what could changes look like? Based in Sydney's inner west, Ray White Annandale licensee Tina O'Connor said there had been an obvious "softening" in home prices in recent months. "I don't think we can deny that, particularly in some of the higher price brackets," she said. "Prices have been pretty resilient compared to some areas because the inner west is pretty buoyant … but we have seen buyers become a bit more selective." Ms O'Connor said some homes were taking longer to clear, but assured prospective sellers there was still movement in the market. Tina O'Connor says there has been a softening across the market. (Supplied: Ray White Annandale) "I don't think we should be panicking … because well-presented homes that are correctly priced from the beginning are still selling," she said. "I'd expect the market to stay as is for a little while, maybe a little bit flat, but there's still transactions happening and still people buying and selling." True Property managing director Michael Catalano said there was a noticeable drop in buyer confidence in the wake of the federal budget. "I'm hearing from buyers on the ground that their budget to purchase a property has reduced around about 10 to 15 per cent, just due to the banks tightening their belts since the budget announcement," he said. "Before the federal budget announcement, days [homes were listed] on market was about 28 days. Now it's about 40 days. "Open-home attendance, that's down approximately 5 per cent." Michael Catalano is the managing director for True Property real estate in Sydney's inner west. (ABC News: ABC News: Simon Amery) Mr Catalano said in recent weeks he had attempted to reassure anxious buyers about their recent purchases. "History shows that these pockets of Sydney never crashes. Yes, it may come down a little or plateau out, but it never crashes," he said. Mr Catalano said he expected the market to continue to transition from an "aggressive growth market into a more cautious and price-sensitive environment". Mr Catalano says homes are taking longer to sell. (ABC News: Ian Cutmore) "Buyers are definitely still active, but they're a lot more selective due to the interest rates, affordability, and uncertainty following the budget." The trend has also been seen at auction, with Cotality data showing the preliminary clearance rate across Sydney for the last week of May was 51.8 per cent. It was Sydney's second-weakest preliminary clearance result for the year so far, behind the 49.2 per cent clearance rate recorded during federal budget week. Those clearance rates had previously not been seen in the city since April 2020. Based in Sydney's south-west, First National Narellan real estate agent Andrew Valciukas said the reaction to the federal budget had prompted "the fastest change in market sentiment" since the COVID pandemic. May was Sydney's second weakest preliminary clearance result for the year. (ABC News: Keana Naughton) "I'm suffering with a little bit of whiplash at the moment, to be perfectly frank," he said. "I have no doubt whatsoever that there will be further interest rate rises in the tail end of this year and potentially into next, which is going to have devastating impacts on the local real estate market." Mr Valciukas said it was an uncertain time for those working in the property sales industry. "There are a lot of self-employed, commission-only real estate agents who will be incredibly concerned right now because their only income is based on transactions. So when transaction volume dries up, then so does their income," he said. Andrew Valciukas says further interest rate increases would have a "devastating" impact on the local real estate industry. (AAP: Bianca De Mar

Home owners told no need for 'panicking' amid Sydney property slump

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