“In the September quarter the median house price jumped 4.2 per cent to $722,718.‘
‘Sydney is … head and shoulders above the rest,’’ Australian Property Monitors senior economist Andrew Wilson said. ‘‘We are in uncharted territory now.’’ Apartment prices in the harbour city have also skyrocketed, APM quarterly data shows. The median price surpassed $500,000 for the first time, growing 3.3 per cent to $515,035.”
This is bad news for first homebuyers and also for those who have been campaigning hard for some years for a ‘strike’ against buying housing, as Dr. Andrew Wilson of APM notes:
“While it is further grim news for first home buyers, Dr Wilson said those who bought 18 months ago had done well. ‘‘House prices are now $90,000 more expensive than they were at the start of 2012,’’ he said. ‘‘And apartment prices are nearly $65,000 higher.’’
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Adelaide and Perth house prices were reported as flat in the quarter.
Meanwhile, prices in Canberra fell (refer to the Canberra chapter in my book for why this was an easily identifiable risk: falling public sector employment is reducing demand in the ACT).
It’s true that Sydney is “uncharted territory” insomuch as prices have continued to all-time highs as I and many others have long expected.
But only insofar as, say, GDP moves into “uncharted territory” every single year in Australia – it’s pretty much what you’d expect in an economy with an inflation target.
Annoyingly, at 36, my age has also now surged into uncharted territory, as have average Sydneysider earnings and, for that matter, the extortionate price of a schooner at Ryans Bar at $10.70 (forget ten pound Poms, this summer will see the first ten dollar schooner Poms).
The obvious underlying point here is that while affordability waxes and wanes, over time prices will break new highs.
The present cycle in Sydney looks to have some way to run yet before affordability constraints eventually reign the market in just as they did in early 2004.
When it comes to favoured locations in real estate, people tend to spend whatever they can afford to buy (and then some) until the rubber band can be stretched no further.
RP Data’s home value index now has Sydney’s home prices up by $64,210 or 9.9% in the last 137 days – that’s $468 per day.
In secondary locations which by there very nature are in lower demand, other factors can bite harder, especially in a downturn.