Sydney makes its name as Australia’s most populated city. It is the capital of New South Wales, and it also demands capital prices. Sydney is one of the world’s most expensive property markets, second only to Hong Kong. Other notables on the list include Paris and the infamously expensive New York. But, you get what you pay for. Several studies have ranked Sydney in the top ten for the quality of living, and with the median house price just north of $1.1 million, this should come as no surprise. With house prices close to double those in Australia’s other capital cities, Sydney is experiencing both good and bad effects to its success from a housing standpoint.
People are coming and going as prices rise:
- Migration is an influx in Sydney. Many are being priced out and moving to areas north, to places like Brisbane as well as Queensland. This is not only to do with renters being unable to afford the bills but the job potential and creation in states such as Queensland.
- New home construction is booming in Sydney, but that’s not making them more affordable. Recent numbers and figures showing the number of residential properties built in New South Wales-specifically Sydney has grown since 2017, with the closest competitor being Melbourne.
- Other data suggests new homes in Sydney are being created mostly in the apartment/unit sector, which is interesting given the mass exodus of renters the city is already experiencing. While the boom in construction of high-rise living areas may temporarily help to dampen the prices in the city, some are wondering if the decrease in rent prices and the more than a significant rise in construction will have negative long term effects (including a crash).
- Interest rates are low due to lenders having been advised and heeding the calls from the government based on the lessons learned from the global financial crisis created by sub-prime loans in the United States back in 2008.
Where Do Things Go From Here?
- The housing markets, as well as the rental markets, are feeling the effects all over the world. Prices for property in Sydney were on the downslide continually during 2018. Fast forward to this year with the trade war between the US and China, and things become a little more risky for those looking to buy new homes, whether it’s in Sydney or anywhere else in Australia.
- An expected recession in Australia is also to blame for property prices decreasing due to the subsequent panic and additional selloff it is bound to create. Given these rather bleak factors, it’s not hard to imagine why the forecast for new home prices between January to June is expected to drop by 5 percent. This figure builds off of 2018’s 6.7 percent drop in new home prices.
- Sydney’s new home market up in the air, with a bit of uncertainty and a touch of hope. Uncertainty hinges on the coming elections across New South Wales on state and federal lines related to issues regarding access to credit for first time home buyers. With 25 percent of new home buyers making up the scope of Sydney’s real estate landscape and the record low rate of interest, there is a sense of urgency for new home buyers.