Sydney Housing Market Ready to Boom

 

I am convinced that Sydney is the next port of call for quality growth over the next few months, and my reasons are as follows:

  • When Labor is removed from office in NSW, this will result in a much improved view of the State's prospects which will stimulate growth;
  • The economic position of NSW is improving;
  • The housing numbers indicate to me that Sydney is at the start of a new period of growth.

 

Housing growth cycles usually start with higher cost areas moving into growth. This is natural, given that people who will be in this segment of the market will be company owners and corporate executives. They are the first bracket of people to benefit from economic improvements or circumstances that give them sufficient confidence to turn their inherent demand into buying action.

Looking at the performance of the very high cost areas and comparing these to the typical and low cost areas, we can very often see what the market is doing, or is about to do.

 

In Sydney, right now, the high cost area is moving forward and outpacing the other sectors. This is a normal formation/trend for the start of a new period of growth. 

 

This data and my experience leads me to the view that in the next 12 months, we will see growth in the Sydney housing market which will be similar to or a little less than the previous 12 months. This growth, due to affordability issues, will not be as high as we have seen in some other house price growth periods. This suggests that by this time next year, the typical Sydney house will have a value in the order of $750,000.

Market Update from John Edwards, CEO Residex

For the latest news on the residential property market, in depth commentary and up to date figures and statistics, join 40,000 other subscribers to the free Residex newsletter by clicking here

September 2010