Feature Sydney 151009

Since kicking off in the middle of 2012, the Australian housing market’s current growth cycle has seen Sydney residential property values increase by a staggering 64%. While growth remains strong in Sydney and Melbourne, growth rates in these cities have been tapering since the middle of last year. The annual pace of growth in Sydney has since moderated to 9.4% over the twelve months to August 2016, around half the rate recorded in the previous twelve months.

During the last quarter, house values accelerated away from unit values, due in part to both the scarcity of detached houses, and also an oversupply of apartments. According to CoreLogic, the median house price in Sydney is now $1.65m, continuing the positive trend from December 2015 but making lending affordability increasingly challenging for new buyers.

Amid the current credit environment, Sydney’s deteriorating rental market will drive prices down, particularly those areas in which there is ample supply of apartments – areas like Botany LGA, Auburn, Lane Cove and Ryde. Caution is also advised for investors considering Parramatta, which has the highest vacancy rates in Sydney. Meanwhile, Bondi continues to experience growth, with certain pockets remaining tightly held.

Sydney’s dwelling approvals are 7.3% higher compared with this time last year, with a total of 16,360 house and 38,307 unit approvals across the city. Emerging areas like Sutherland are witnessing an increasing number of multi-unit sites now being offered to the market, with some developers facing profit concerns in the long-term – an issue further exacerbated by borrower difficulties obtaining finance for off-plan properties.

Imminent changes to building design regulations are expected to reduce the number of dwellings per site - where once a site might have accommodated 80 units, it may now only allow 50.

 

Feature Pic State of the market 161121Download the print friendly version of Property Outlook 2016: click here


Like investors, homebuyers should invest in professional, independent and customised advice, if required, to assist with their home purchase.