Sydney Property Prices Show No Signs of Slowing Down

December 8, 2016

Sydney Property Prices Show No Signs of Slowing Down

The economy in Australia is certainly different in many of the cities, but one place where housing prices continue to rise strongly is in Sydney. The prices of homes in 2016 have seen much growth this year, and they are expected to have a repeat performance in 2017.

Sydney’s Demand for New Housing Continues to Rise

The price of homes in Sydney has continued to rise for some time and it is doubtful that this is going to change in the near future. There still is a strong demand for new housing, and it looks like this growth rate is peculiar to Sydney.

Ms. Dabbs, an economist from the financial evaluation company, Moody’s Analytics, stated that property prices in Sydney have grown as much as 11 percent in 2016. One thing that she attributed to this effect is that interest rates on home loans are still low and that the income in Sydney is also rather high.

Debt Continues to Grow

In contrast to Moody’s view, Roger Montgomery of the Montgomery Fund, which manages more than $1 billion of their clients’ funds, differs. He says that the amount of debt held by Sydney-siders is now considerably high.

Montgomery’s view is that many people in Sydney now have an unusually high amount of debt, in relation to their income and the GDP. They have been looking to profit from the growing real estate prices, focusing particularly on apartments.

Builders Are Finding It Difficult to Sell

Unfortunately, he says, a problem can be foreseen because it is impossible for an unusually large amount of apartments and record-high prices to co-exist for very long. Some developers are already finding it difficult to get buyers.

In order to move the apartments faster, some developers are offering various incentives. Some offer holidays, others give frequent flyer points, and some even offer 10-year rental guarantees.

Sydney Has the Highest Growth Rate in the Country

Most other cities in Australia are not experiencing the same level of growth as Sydney. Cities such as Melbourne and Brisbane are stagnating in their real estate prices.

The mining industry is suffering in cities such as Darwin and Perth. In fact, the unemployment rate is rather high in Perth. This is causing a lowering of housing prices in those areas in order to sell them.

Lower Housing Costs Are Apt to Affect Other Parts of Australia

Although the prices in Perth are currently low, Ms. Dabbs expects it to pick up considerably in the 2020’s. It is having an effect on other parts of the country because many people in that area cannot afford the higher prices.

This downward movement of new housing prices is sure to eventually have an effect on other parts of the country. While the problem is largely in the west now, it is expected to hit the east coast before long. Montgomery also blames economic growth problems in China as being partly responsible for the slowing of growth in Western Australia.

Home Loan Interest Rates Are Rising

Another thing that is apt to affect the ability of people to buy real estate in the near future is that a few lenders have just raised their interest rates on some home loans. This was done without the Reserve Bank of Australia (RBA) raising rates.

Although those banks have only raised the rates on some of their loans, it is likely that other banks are sure to follow. It is also expected that the RBA will raise its rates within the next 12 to 18 months.

If you want to buy into the strong housing market in Sydney, now is the time. Time is limited in which the best interest rates will be available. With strong growth expected for some time to come, you do not want to miss this tremendous investment opportunity.

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