While Sydney property investors have had much to rejoice about in recent times, with the city’s house prices finally making decent gains after years of negligible growth, the celebrations might be short lived according to a study from RP Data.
According to the property research group, prices in the Harbour city increased by 9.1% on average over the 12 months to August 31st, hitting $582,000 for houses and $450,000 for apartments. However, prices are expected to flatline and remain around current levels throughout 2011; an outcome that will be compounded by rising interest rates.
Chief Economist of St George Bank, who commissioned the RP Data report, Justin Smirk said of the findings, “The good news for first-home buyers is that average Sydney house prices are expected to stay relatively stable in the short term, so they shouldn’t feel rushed to jump into the market. Affordability remains the key factor for property prices in Sydney,” which will help offset a shortage of properties and keep prices level, he added.
Although Sydney is still the least affordable city in Australia, residential prices in the NSW capital have underperformed the overall Australian real estate market over the last decade, with an average annual increase of 6.4%, compared to 9.5 nationally. However, RP Data says the state’s growing population and worsening housing shortage will help to drive prices higher over time.
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