Record prices continue to be recorded for properties throughout the Sydney Region, with over 100 suburbs in Sydney recording double digit (Median) price increases over the past 12 months (Australian Property Monitors).
A range of factors are at play that are continue to place upward pressure on housing prices for the foreseeable future:
- The current lack of quality housing stock (particularly in “Prime Suburbs” – Eastern Suburbs, Lower North Shore, Inner West) which show no sign of abating. As highlighted by the Spring property sale period, where expected significant housing stock increases did not eventuate, stock levels for Sydney Houses (particularly in premium areas) are expected to remain at allow levels in the short-medium term;
- The high rate of Stamp Duty (particularly in NSW) is likely to be an ongoing concern for potential sellers, who would prefer to hold onto their existing property due to the costs associated with the purchase of another property;
- Current record low Interest rates are continuing to attract investors and first-time buyers into the Market. Interest rates are expected to remain low (or even decrease) into the foreseeable future;
- NSW is experiencing a period of comparatively strong economic growth, with new job creation nationally being most notable in Sydney;
- The comparatively large National migration intake over recent years has resulted in further demand/supply constraints, particularly in Sydney region;
Due primarily to the lack of quality stock, High Auction clearance rates continue to defy forecasts and show no signs of abating in the short to medium term.
Following a sustained period of construction activity within the Sydney Apartment Market, the potential exists for the alleviation of current supply constraints. While it is likely that an over-supply of Apartments may well place some downward pressure on Apartments prices in the short-medium term, its effect are likely to be more confined to these key construction areas (current growth corridors). Demand for Apartments in premium (and well serviced) locations however, is likely to be more resilient (and therefore have less impact on current price levels).
As particularly relates to Investors currently considering an Apartment purchase in Sydney, it is likely that it will be those Investors adopting longer-term strategy (i.e. of holding the property for 5 or more years), that will benefit most from purchasing a property (particularly in premium areas) in the current Market.