Since June 2002, house prices have risen by a total of 31% in Sydney, compared to 79% in Brisbane, 80% in Melbourne and 143% in Perth, HIA reports.
The nation's lemon that's for sure.
And yet, numerous prominent and not-so-prominent housing bears (including yourself! ) have been constantly claiming Sydney house prices are in a bubble? Clearly they/you have been wrong all this time - who would have thunk it?
So here we go again. The housing market bubble bandwagon is up and running – but this time it’s a crazy boom not a scary bust that is being predicted by some for the Sydney housing market next year.
Low interest rates, rising confidence and a surge in investor activity are the current drivers of the Sydney housing market together with a solid performance by the local economy.
But the underlying drivers remain problematic for sustained high levels of house price growth next year.
Sydney’s unemployment rate is now rising towards 6 per cent and predicted to continue to rise.
Prices growth in Sydney is likely to peak over the next six months, with continued solid growth dependent on a sustained revival in the economy and unemployment falling to or below 5 per cent.
For the record, Sydney’s highest annual house price growth over the past 20 years was in 2002 at 22.2 per cent. Next best was 2001 at 17.4 per cent.
If, as has been heroically suggested by some, Sydney house prices were to rise by 20 per cent next year that would bring the median price to nearly $900,000. Enough said.
Don't believe the vested interest boom articles. Read Macrobusiness and Phil Soos and other bears - Sydney is currently undergoing the biggest crash the world has ever seen!
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
The charts below show Sydney house price movements over the past three decades.
Sydney boomed during the late 90s and early 2000s, that boom peaked in 2003 and then prices fell and stagnated for a few years.
Growth kicked off again in 2007 and has been trending up since then, with a couple of minor corrections along the way.
The current boom has another few years to run. I expect this boom to peak around 2015 with a median house price close to $1M (currently $729K).
On a price/income ratio basis, that would bring Sydney back up to around 2003 levels - i.e. a $1M median house price in 2015 would be no less affordable than prices were at the 2003 peak. In fact, affordability would be better, since interest rates are still likely to be lower than they were in 2003.
Surely your prediction relies on the assumption that global central banks will continue with their QE policy that they embarked on in 2008 in order to avert a depression and artificially inflate asset prices?
Unemployment lags economic growth. While unemployment is Forecast to rise to 6%, consumer and business confidence has already shown large increases since the Federal election - so unemployment should fall soon thereafter. And while ever there continues to be a lack of supply of new housing to meet population growth and economic demand, there will be no large crash in prices - this is the part overseas observers always miss. In Australia prices stagnate for a few years but don't generally fall very much due to the chronic lack of supply. Perhaps there will be no boom like the early 2000's, but certainly still good reasons for optimism by astute property investors.
Surely your prediction relies on the assumption that global central banks will continue with their QE policy that they embarked on in 2008 in order to avert a depression and artificially inflate asset prices?
Huh? What the hell does QE going on (or not) in foreign economies have to do with the potential value of Sydney houses? If case you hadn't noticed, you have to pay $AU to buy Sydney property....
Surely your prediction relies on the assumption that global central banks will continue with their QE policy that they embarked on in 2008 in order to avert a depression and artificially inflate asset prices?
Like most predictions, it relies on a number of assumptions, but that's not one of them.
Huh? What the hell does QE going on (or not) in foreign economies have to do with the potential value of Sydney houses? If case you hadn't noticed, you have to pay $AU to buy Sydney property....
This must be the most naive comment I've ever read from you. I'd prefer not to waiste my time trying to link the pieces together for you.
Shadow
4 Oct 2013, 12:01 PM
Like most predictions, it relies on a number of assumptions, but that's not one of them.
So in that case, you are confident that if a reversal of policy in global central banks takes place, and global interest rates start moving up, your prediction will remain?
So in that case, you are confident that if a reversal of policy in global central banks takes place, and global interest rates start moving up, your prediction will remain?
One of my assumptions is that Australian interest rates won't move up significantly (by more than 1%) before 2015.
Interest rates in other countries don't really come into it. Our rates are already much higher than in most comparable countries.
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