THE SUPERCHARGED HOUSING MARKET
The Metro Auctions insight into the Sydney Property Market
The explosive property boom continues despite the consistent doom and gloom reporting from media outlets across the country. The low interest rates set to remain steady as announced by the Reserve Bank Australia earlier this week is just one factor driving the supercharged Sydney market, with lack of supply and a tax system that continues to favour property investors also contributing.
Reports indicate that Sydney has now surpassed London and New York to rank as the world’s second most expensive housing market and there is nothing certain to indicate that this trend will slow in the near future. In fact, statistics shows that home prices in Sydney have surged more than 140 per cent in the last 15 years, with the average home price now just shy of the $1 million dollar mark.
Investors continue to dominate the market, using negative gearing to claim the majority of costs associated with their investment property including mortgage interest, using this as a tax offset against other income. Investors have flooded the Sydney market and other capital cities since 1999, when capital gains tax was halved making property a much more appealing and lucrative asset.
While the market continues to boom, there remains those that cannot break through the entry barriers with fears that the Australian dream of home ownership in the major city could become impossible for many. Potential buyers from the Southern states instead continue to push further north or into outer suburban areas which are substantially more affordable.
While some recent media reports indicate that the Sydney market has ‘flat lined’ across August and September the data suggests that this trend would be considered normal given annual trends. Tim Lawless of CoreLogic commented that the ‘marketplace is slowing down, it certainly hasn’t gone negative yet but if we see a continuation in this trend over the coming months we may see Sydney move into negative territory’. Mr Lawless continued on however to state that ‘historically, we’ve seen downturns generally somewhere between 3 and 10 per cent across major capital cities’.
While there is no certainty in the future, it is clear to see that the Sydney property market is a formidable force within Australia and will continue to be analysed, watched, critiqued and scrutinised as time goes on.