Invest
Sydney predicted to avoid house price correction
House prices in Sydney are likely to “plateau and remain expensive” rather than experience a significant correction, according to Citi Research.
Sydney predicted to avoid house price correction
House prices in Sydney are likely to “plateau and remain expensive” rather than experience a significant correction, according to Citi Research.
The company says the “exceptional price growth” seen in Sydney’s housing sector in recent years is due to low exposure to the declining mining and manufacturing sectors combined with a low interest rate cycle, low unemployment and an excess demand for property, rather than evening out with growth in other states.
“There is also an argument that during the previous decade, prices for these other capital cities were improving while Sydney’s median price was only sideways, hence the current period is Sydney’s catch-up. This argument, while somewhat appealing, is incomplete,” the company said.
Citi Research said a significant correction in the housing market would likely require a “large sustained increase in unemployment”, which would be most likely triggered by an interest rate tightening cycle.
“However, households on average have substantial positive equity in their residential properties and mortgage repayment buffers that would take some time to unwind before forced selling occurred.
“The most likely scenario is that Sydney prices plateau and remain expensive unless there are some large, external, negative shocks to the economy.”
The forecast came as former CBA chief executive and Financial System Inquiry chair David Murray warned that the Australian property market is in an investor-driven bubble.
In an interview on Sky News earlier this month, Mr Murray said the Australian economy is vulnerable because “there is a bubble in the housing market”, which he likened to “tulip mania”.
“All the signs of a bubble are there. Many of the signs are the same as the Dutch tulips – people’s behaviours, people’s defensiveness about any correction in the market. If the economy tracks okay, it might turn out that this thing sorts itself out. But when those risks are there, something needs to be done about it in a regulatory sense. The RBA and APRA need to stay on it,” he said.
“We have more investors in the market than we have had historically. Those investors, even the ones on lower incomes, own multiple properties that are often cross-collateralised and they are the people who become forced sellers. That’s the risk to the system.”
Property
Top 20 school zones for property growth
New report from Domain revealed the top 10 primary and secondary school catchment zones, all with more than a 25 per cent house price growth year-on-year. ...Read more
Property
More Aussies ‘in tears’ during house-hunting
New research has found that 9 out of 10 Australians find the process of house-hunting more frustrating than exciting, revealing the search for “the one” is filled with frustration, stress and tear...Read more
Property
Property hotspots for young Aussies revealed
New research from Westpac revealed that the number of first home buyers looking to enter the market has more than doubled since 2019, proving that COVID-19 continues to shape Australian home ownership...Read more
Property
Aussies swap housemates for home ownership
The number of younger Australians looking to enter the property market in the next five years has doubled, as COVID-19 restrictions sees home ownership goals increase, according to research released ...Read more
Property
Falling loan deferrals prove market recovery: REIA
The reduction in loan deferral defies doom and gloom forecasts in the property market, the Real Estate Industry of Australia has said. ...Read more
Property
Why are expats returning to property market?
Expats are returning to Australia in droves, eager to put their money into safe investments. ...Read more
Property
Stamp duty to be phased out under new proposal
The NSW government has stated that it could phase out inefficient taxes such as stamp duty as it looks to recover from the COVID-19 pandemic. ...Read more
Property
Melbourne rents continue to decline
While most capital cities recorded increases in asking rents, Melbourne continued to see declines in both houses and units, according to latest data from SQM Research. ...Read more
Property
Top 20 school zones for property growth
New report from Domain revealed the top 10 primary and secondary school catchment zones, all with more than a 25 per cent house price growth year-on-year. ...Read more
Property
More Aussies ‘in tears’ during house-hunting
New research has found that 9 out of 10 Australians find the process of house-hunting more frustrating than exciting, revealing the search for “the one” is filled with frustration, stress and tear...Read more
Property
Property hotspots for young Aussies revealed
New research from Westpac revealed that the number of first home buyers looking to enter the market has more than doubled since 2019, proving that COVID-19 continues to shape Australian home ownership...Read more
Property
Aussies swap housemates for home ownership
The number of younger Australians looking to enter the property market in the next five years has doubled, as COVID-19 restrictions sees home ownership goals increase, according to research released ...Read more
Property
Falling loan deferrals prove market recovery: REIA
The reduction in loan deferral defies doom and gloom forecasts in the property market, the Real Estate Industry of Australia has said. ...Read more
Property
Why are expats returning to property market?
Expats are returning to Australia in droves, eager to put their money into safe investments. ...Read more
Property
Stamp duty to be phased out under new proposal
The NSW government has stated that it could phase out inefficient taxes such as stamp duty as it looks to recover from the COVID-19 pandemic. ...Read more
Property
Melbourne rents continue to decline
While most capital cities recorded increases in asking rents, Melbourne continued to see declines in both houses and units, according to latest data from SQM Research. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
