It’s the news many NSW property investors and homeowners have waited years to hear – the Sydney property market is creeping out of the doldrums.
Recently the media reported that the Sydney property market is moving on buoyed by two interest rate cuts and predictions of more to come.
The latest RPData figures show in what is usually a seasonally-weak month, Sydney dwelling values rose 1.0% in June.
RP Data figures show apartments, which are catching up to freestanding houses in value and popularity, have hit a median of $477,500, up from $465,000 last year.
Some thoughts on Sydney:
RP Data director of research Tim Lawless recently said the good news was Sydney had stopped going backwards month by month. But anyone looking for quick gains in under three years was not going to find them. “We’re past that phase,” he said.
The biggest gains in property values would be reaped in the inner city as research showed increasing demand from not only young people but families wanting to live closer to the city and sacrificing houses for units in order to do so, Mr Lawless said.
Rod Cornish, head of real estate strategy at Macquarie Group said future rate cuts would see dips and troughs in house prices start to disappear in spring as the market evens out.
“Particularly with two more rate cuts forecast later this year, Sydney home prices will start stabilising then and early into next year,” he said. “Rate cuts do not have a sudden impact and typically it takes six to eight months before their real effect is seen.”
The cuts, which have placed the average standard variable rate at 6.38 per cent – a two-year low – would also see moderate growth in prices next year, Mr Cornish said.
“The median price in Sydney is currently only 12 per cent above where it was in March 2004 so it’s been very subdued for a little more than eight years, during which time prices have been rising 1.7 per cent per annum,” he said.
While the overall Sydney property market has been reported as flat over the last few year, in fact it’s segmented. In particular apartments in the inner west and eastern suburbs have performed strongly with double digit growth not uncommon in a number of suburbs.
On the other hand at the upper end of the market, luxury house prices have faltered as have home values in the outer suburbs.
With the undersupply of good near city apartments pushing up rentals, first home buyers are coming back to the market.
At the same time savvy property investors are getting a foothold ready for the next stage of the cycle.
This doesn’t mean the next boom is upon us.
Typically the next stage of the property cycle is the stabilisation phase. Buyers are back and slowly more sellers, including some who couldn’t move their properties over the last few years, are going to put their properties, back on the market and we’ll have a period of unspectacular growth.
Over the next year strategic property investors are going to set themselves up for the next Sydney property boom by buying the right type of property at he right price. They will have learned from the last few years and rather than speculating, they will by a property with an element of scarcity that will be in continual strong demand by owner occupiers (because these are the ones who push up property values) and tenants.
I’ll be sharing my thoughts on the Sydney property markets at my upcoming National Property Market and Economic Updates around Australia. Click here for more details.
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