Recent data has revealed capital cities recorded the strongest capital gains for winter since 2007 – largely fuelled by the Sydney and Melbourne markets.
According to an industry analyst, Sydney house prices aren’t finished yet. In fact, the Sydney housing market may experience another 5% rise in prices between now and the end of the year.
Capital’s Rod Cornish told the Australian Financial Review
that the Sydney property boom depends on rate decisions.
“Rates now look like being low for longer than we originally thought which may impact on prices,” the AFR quotes Cornish.
Cornish told the AFR that without a rate rise, Sydney would reach the tipping point – where the market would change – after another 15% price rise.
Although, Cornish admitted that policy would be likely to step in before the market reaches any tipping point.
“This degree of price rise would take the median house price to a high level and you could imagine if this was widespread across Australia, there could be an interest rate reaction to slow the housing market prior to that point,” Cornish told the AFR.
If rates were to rise 1%, Cornish says the market change point would be hit after a 7% price rise. If rates were to rise 0.5%, the tipping point would be reached after a 10% house price rise.