Why three major changes could signal positive change for Central Coast real estate

Recent decline in property values on the Central Coast and Sydney could soon be reversed by as early as the end of the year as a “perfect storm” of market forces lifts buyer demand and puts a floor underneath falling prices.

Housing experts pointed to three major changes poised to alter the direction of the market, which had been expected to only bottom out by mid-2020.

They included the Coalition’s unexpected win in the federal election last week, which has given renewed confidence to buyers and sellers anxious about Labor’s plans to cut negative gearing.

The Reserve Bank of Australia has also signaled an imminent cut to the cash rate, possibly in early June.

Such a cut would coincide with a push from financial regulators to end the current squeeze on credit.

The Australian Prudential Regulation Authority, the banking regulator, announced this week it would review a mix of stringent lending guidelines put in place when the market was booming.

Lifting these policies would allow owner-occupier buyers to borrow about 9 percent more and give more house hunters access to a loan.

CoreLogic head of research Tim Lawless said any one of these three developments on their own would be welcome news for buyers and sellers but together they would have a “material impact” on sales.

The property research group had earlier forecast a bottoming out in Sydney prices by the middle of next year, but that recovery was likely to occur sooner due to recent developments, Mr Lawless said.

“The market has become fundamentally different in just a week,” he said.

“The shadow of Labor’s negative gearing policies was hanging above sales for much of the year but a lot of confidence has returned to the market now that it’s gone. And markets survive on confidence.”

Preliminary figures suggested prices were continuing to fall at a slower pace than last year, Mr Lawless added.

“The downturn has been losing momentum since January and we’ve seen that continue this month,” he said.

Starr Partners chief executive Douglas Driscoll said the recent changes were “like all the stars aligning at once”.

“If this doesn’t trigger renewed demand from buyers I don’t know what will,” Mr Driscoll said.

“Buyers, particularly first home buyers, will be feeling like they have more wind in their sails … it will be a very different market by the end of the year.”

Local Charmhaven agent Andrew Sorensen, who sells property in some of the Coast’s most affordable suburbs, said that Liberal’s election promise to help first home buyers by offering a five per cent deposit — instead of the usual standard of around 20 per cent, would make a huge difference to buyers trying to get into the market.

“I think the biggest point to make about the promise is the reduction in mortgage insurance, which would be a massive cost saving for first home buyers, and could cut a year off a loan,” he said.

“With no stamp duty, the improved affordability is huge.”

Agent Stephen Gittoes from Gittoes East Gosford said that the election result was great for the Coast, as it would bring investors back into the market and improve stability.

“People stopped listing right before the election — it is human nature to hesitate with the unknown, but listings should pick up a bit now — stability is everything,” he said.

“The market has never been a ‘disaster’, especially on the Coast. People were buying and selling in the boom, but that had to slow down at some stage.

“The main thing that changed in our market was the banks — people have found it really difficult to get loans — I’ve got a classic example with a broker who wanted to get bridging finance and couldn’t get it approved — that’s how tough it’s been.

“It will make a big difference for the Coast if the APRA changes come in, but at the same time, we have been and are still a very affordable market compared to Sydney, and that’s across the board from entry-level to prestige property. You can get a nice family home up here for $500,000, which just wouldn’t happen in a good part of Sydney.”

My Housing Market analyst Andrew Wilson said an even bigger bounce in activity would probably come after August.

“We’re heading into winter, which is usually a quieter period for real estate, and the true test for the market will be after that,” Mr Wilson said.

Sydney’s median home price has fallen nearly 14 per cent since the market peaked in July 2017.

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