In the Australian city with the highest and quickest rise in home prices, things are turning around. Falling home prices in Sydney has driven an overall decline in the Australian real estate market. Sydney accounts for a third of the national value for homes in Australia.
Property analysts are wary about the effect falling home price might have on consumer confidence. Not only in the property sector but also in other sectors of the economy. A series of restrictions previously implemented have already taken effect. In December 2014, banks were asked to cap home lending growth at 10 per year per year.
Interest rate cuts not expected this time round
In the past few years, low-interest rates and the influx of foreign buyers propelled Sydney’s property sector into the global forefront, making it the world’s second most expensive city. This time round however, interest rate cuts will be unlikely.
Property prices in Sydney fell likely due to the regulators clamping down on interest-only mortgages. It has dulled investors speculation and rising state taxes have also make buying Australian property more difficult for foreign buyers and investors. Interest rates are expected to stay on hold and the market is expected to stay level until a possible rise late next year.