The majority of mortgage brokers surveyed by a non-major bank believe the Sydney and Melbourne property markets are yet to reach their peak, despite recent figures pointing to a slowdown.
An overwhelming 70 per cent of mortgage brokers surveyed by MyState Bank do not believe the housing markets in Sydney and Melbourne have peaked. Almost a quarter (23 per cent) disagreed, saying the markets are peaking now, while 7 per cent of brokers believe the markets will soon peak.
The findings were revealed in a survey of MyState’s national broker network carried out over the past 10 days.
Of those who believed the housing markets in Australia’s two largest cities would continue to grow, 3.5 per cent said they expected continuing strong growth while 21 per cent said they expected medium to strong growth to continue.
A large group comprising 43 per cent of respondent brokers said that while growth would continue, it would slow significantly. The remaining 3 per cent said they expected the markets to peak next year.
The bullish stance from brokers comes after the latest figures from CoreLogic show home values in Sydney and Melbourne fell by 1.3 per cent and 1.7 per cent, respectively, during the month of May.
The two cities were largely responsible for slowing growth across combined capital cities, which saw a 1.1 per cent fall in dwelling values, according to CoreLogic’s head of research Tim Lawless.
While seasonal changes and the impact of APRA’s latest regulatory measures to curb interest-only lending are a factor, Mr Lawless said a “dent in consumer confidence” is likely contributing to slower growth conditions.
“In particular, the Westpac ‘time to buy a dwelling index’, fell 6.5 per cent over the month. According to Westpac, ‘consumer sentiment towards housing shows an increasingly negative view’,” he explained.
Meanwhile, CoreLogic estimates of dwelling turnover for the combined capital cities were tracking 6.9 per cent lower year-on-year.
“It appears that housing activity has eased, which is attributable to a range of factors including affordability constraints, tighter credit policies, rising mortgage rates and a downturn in consumer sentiment towards housing,” Mr Lawless said.
AMP Capital chief economist Shane Oliver said “the drip feed of negative news” around the property market in Sydney and Melbourne is continuing to mount.
Surging unit supply, bank rate hikes, tightening lending standards, reduced property investor tax deductions, and ever tighter restrictions around foreign buyers appear to be taking their toll on the housing markets of Australia’s largest cities.
“Our view remains that home price growth has peaked in Sydney and Melbourne and that price declines lie ahead, particularly for units,” Mr Oliver said.