Where Sydney goes, the nation follows
The market bottomed out much quicker than people expected.
And now it’s changed gears into boom much quicker than people expected too.
Not long ago, people thought Sydney would be ending the year with falling prices.
Now, some analysts reckon we’ll close out 2023 with prices growing over 10%.
(That’s booming!)
There’s AMP’s Shane Oliver (still one of the best in the game):
“The way things are going, we could end up with a 10% rise in house prices this year”, AMP Capital’s chief economist Shane Oliver said.
“Sydney prices have accelerated this month, so there’s probably an element of FOMO in there, particularly those who are less affected by the rate hikes”.
“The tightness in the for-sale and rental markets, combined with the pickup in house prices seem to be bringing buyers out of the woodwork”.
“The shortage of supply has swamped the negative impact of higher interest rates”, Oliver said.
Andrew Wilson at My Housing Market agrees:
Wilson also believes Sydney house prices will grow by double-digits this year.
“I think a 10% increase is possible, given that we’re on the verge of an 80% auction clearance right now, which is quite remarkable”, Wilson said.
“I think a lot of it is that buyers are realising home values are still lower than they were a year ago, but are now rising again”.
But it could all be bigger than that, since not everyone believes the official numbers:
Selling agent Thomas McGlynn of BresicWhitney believes Sydney value growth was likely stronger than CoreLogic is reporting.
“Most sectors of the market are now actually performing quite strongly, even smaller apartments, so I think the price increases are not being reflected in the data yet”, McGlynn said.
“I think once the recent strong sales have flowed through, they’d show even stronger results”.
Really, the only thing keeping prices in check right now is the substantial drop in borrowing capacity caused by the RBA’s 3.75% of interest rate hikes.
I don’t think the market has fully digested all of that. There’s still all the Covid-era fixed rate mortgages that need to reset.
So that’s keeping a brake on things for now (not that you’d notice.)
But there’s a decent chance that the RBA actually starts cutting rates towards the end of the year.
If that happens, look out. Prices will surge higher.
And as usual, Sydney is the bell-whether here. But where could be next?
Perth is looking pretty hot, thanks to a resurgent minerals sector. Melbourne’s population will rocket on the back of forecast immigration. Brisbane still trades at a discount to the other capitals.
Adelaide is just a really nice city.
No, this will be a case of a rising tide lifting all boats. All the capitals will do well.
Sydney is just leading the charge.
DB