Brokers in Sydney can expect a bit of a boost in the near future, according to Residex founder John Edwards, with the median house price in the NSW capital expected to reach $1m over the next seven years.
The prediction follows new data showing the average cost of a Sydney house has reached a ‘significant landmark’ price of more than $700,000.
“If growth continues at an annual rate of just 5.2% per annum, which is a likely outcome and is less than the Residex model predicts, the Sydney median house price will rise to $1 million over the next seven years,” Edwards claims. “In fact, the Residex predictive model suggests this outcome will be achieved a year earlier, by 2019.”
May was a big news month for property news, says Edwards, but whether the news was good or bad depended on your position in the market.
“If you are anxious for personal wealth gains and you are invested in housing, the May statistics reveal that most markets have produced growth in housing values,” says Edwards. “On the other hand, if you are trying to get funds together to buy a house, then the news is not so positive.”
The research group’s data shows rents are rising, house prices are increasing and home savings deposits are growing at a lower rate.
“In fact, after-tax savings will not be keeping up with house price inflation. For the retired population that rely on investment income, wealth will have decreased due to the share market adjusting down and reducing interest rates.”
On the other hand, Edwards says international exporters, manufacturers and farmers should have a ‘twinkle in their eye’ as the Australian dollar has adjusted down from its previous high.
Some notable points evident in the May data:
House price growth across Australia is now positive for both units and the house and land market;
No major capital city (Sydney, Melbourne, Perth) in the house and land market has provided a negative result in the month of May;
A slowing in the mining development sector is impacting on growth in Western Australia;
The unit market in Victoria is proving to be much more immune to the calculated oversupply issues. There appears to be a very careful release program underway by large developers;
Sales activity has improved but needs to improve more significantly in major capital city markets;
While auction clearance rates have improved, the volume of stock on the market remains limited and low stock levels are driving price growth. Lower auction clearance rates are expected to continue as vendors start to be less realistic about minimum asking prices given the reported more positive growth news.
*Source: Residex website