Flower buyers fled Sydney, to more affordable Brisbane and Melbourne.
Sydney`s new apartment market was hit hard in the third quarter of this year, with property buyers abandoning the new state capital and looking for opportunities in Melbourne and Brisbane, where prices are more affordable, according to Urbis, a property research consultancy.
According to Urbis`s latest Apartments Point Apartment Essentials report, sales in Sydney fell 88 percent compared with the same period last year (based on comparable market samples) and the push-out rate of new projects fell 60 percent compared with the same period last year.
In contrast, sales and sales of apartments in Melbourne and Brisbane increased in the quarter, while sales on the Gold Coast grew strongly.
"Sydney`s housing market is feeling the pressure of a lack of interest from buyers," said Ostwald, head of Urbis in Australia.
The negative sentiment in the housing market, squeezed by the credit crunch, hesitated or buyers who wanted to buy but could not afford loans, waited and watched off the counter with a large number of Chinese developers leaving the Australian market, a triple pressure that led to a nationwide campaign. New apartment sales and project start-up in this quarter tend to slow down.
Strong growth in the flow of interstate immigrants from the new state has made housing markets in Melbourne and Brisbane, which are more affordable, performing better than Sydney.
The weighted average selling price of an apartment in Sydney (A $833152) was more than 200,000 higher than Melbourne (A $600558), nearly one hundred thousand higher than Brisbane (A $736065), and Brisbane and Melbourne`s return on investment was higher, according to Urbis.
The data also showed a general weakness in home prices across Australia, with the country`s weighted average selling price falling from A $727691 in the first quarter to A $687057 in the third quarter.
Sydney`s new apartment, which sold at an average price of 1.1 million six months ago, is down 24%.
"like big capital cities, new apartment prices across the country have fallen across the country-about 5 percent in the past 12 months," Ostwald said.
He added that in the current milder environment, developers are making appropriate price cuts to their inventories.
The main reason for the weak housing market is that banks` lending requirements are stricter, affecting not only investors but also homeowners, Ostwald said.
Buyers tend to wait for months to see if they can get cheaper prices when prices fall from their peak, he added.
Urbis said that while it is currently a buyer`s market, the current slowdown in flat sales and project launches could lead to a shortage of housing supplies in 12 months and a rise in rental yields that could fuel renewed activity in the housing market.
