She said a market with plenty of supply that was performing poorly was desirable from an affordability perspective.
“We want prices to come down. We want lots of choice for buyers,” she said. “There is some risk associated with that especially when people have taken out large loans.
“If values are rising and profits are increasing, it’s not only a good thing for sellers, it’s kind of a guarantee that if you do fall behind on your mortgage payments, you can service your debts.
“If prices are falling it increases the risk of people not being able to repay the bank, but it is a good thing for buyers that are getting in on that downswing.”
A recent Productivity Commission study said housing would be more affordable if more homes were built, and both the NSW and federal governments are working on increasing the supply of homes to address a crisis that has sent Sydney house prices and rents to record levels.
Loading
AMP chief economist Shane Oliver said a high portion of loss-making sales in councils such as Parramatta and Burwood could be due to higher levels of mortgage stress in these areas, particularly if owners had held properties for a shorter period of time.
“They’re all sort of mid-suburban. They’re areas where there would be more mortgage stress,” he said. “[They would be people] who bought a few years ago and they have to sell now when there are many more sellers in those areas.”
Oliver said those councils had a large portion of units and would have higher exposure to loss-making sales as a result.
“The unit building boom which occurred between 2015 and 2019 … in Sydney it was all over,” he said. “A lot of cranes went up in Parramatta and Burwood, it wasn’t just the city. The supply was more pronounced than it was in other areas.”
Starr Partners chief executive Douglas Driscoll said there had been an apartment building boom in places such as Parramatta, Strathfield, Zetland and Chatswood that was weighing on the figures.
Unit owners were more likely to lose money than house owners.Credit: Ben Rushton
“You wonder why they were being built – were they being built to satisfy demand or were they being built because developers could get planning permission for them?” he said. “The market’s somewhat out of kilter.
“Yes, we are facing a national housing shortage which is exacerbated in Sydney but it’s always a matter of building the right houses. Families are unlikely to want to squeeze into a one or two-bed unit.”
He said it was very rare to see a house sell for less than its purchase price, although he also thought units in general seldom sold for losses. Often there were extenuating circumstances such as an owner who got carried away at auction when they bought, or a changing environment around the property, or a few new tower blocks going up nearby.
Loading
Four-bedroom houses are fielding the most demand from buyers now, but interest in apartments was still resilient as first home buyers took advantage of stamp duty concessions.
“There’s fairly high demand for apartments as well,” he said. “It depends where they are and what they are.”