While Sydney property is booming, the market is divided as to whether the bubble is on the verge of bursting or if property will continue to grow.
With property prices quickly moving out of reach for the average Australian, buyers are learning to be flexible with their approach to home ownership.
While the market has been on an upward trajectory since 2012, market conditions have sparked debate about whether it has reached its limit. Our research suggests that experts have compelling arguments for both sides of the coin, and are divided on what we can expect in the future.
Sydney Property Growth is NOT Over, because:
Interest rates are at record lows, and not likely to rise significantly in the foreseeable future. While rates are low, buyers will continue to enter the market
Even though Australian unemployment is struggling, Sydney employment is strong and whilst strong, buyers remain confident to purchase
The supply of new property is not growing in line with demand. Buyers are still outnumbering sellers, a typical 2 bedroom Randwick property attracts 527 visits per listing (May 2017 www.realestate.com.au). Auction clearance rates are at a record high, 81.1 percent, (March 2017 afr.com.au), attending any auction in Sydney, particularly in the most desirable areas, will highlight the number of eager bidders vying for the same property.
Foreign buyers are snapping up brand new apartments, which is driving selling rates and perpetuating the lack of supply in an already scarce market. Meanwhile Sydney population growth continues to surge the market, as both domestic and international migration contribute to the booming Sydney property market
Stable rental markets offer significant incentive for investors, as buyers continue to take advantage of the consistent income
Sydney Property Growth Is Over, because:
Global interest rates have bottomed, while Australian retail banks are beginning to make incremental rate increases to borrowers. While significant interest rates hikes are not expected, cuts are not likely either. With the market continuing to experience growth, we can expect increased regulation to stabilize the market.
In fear of unrealistic pricing, buyers are tending to step back from the property buying process altogether. Couples and families continue to rent in a bid to wait-out the property boom, or opting to buy in other areas of Australia where home ownership is less competitive.
Tougher regulations imposed by The Australian Prudential Regulation Authority (APRA) to both owner occupiers and investors is intended to slow the market growth down and we will possibly start to see the effects of this shortly.
Mortgage repayments for Sydney property have been relatively unaffected in the last few years. While interest rates have decreased, property prices have increased at the same rate leaving repayments stagnant. Mortgage rate changes are going to make a significant impact to affordability, in some price categories, as holders repayments potentially increase.
When asked the secret to his wealth Baron Rothschild replied, “My secret, it is this, I never buy at the bottom and I always sell too soon”
To discuss how to time a suitable buying strategy to secure your next home or investment property, please call us on 1300 132 970
