Forecast for Sydney property price rise bad news for affordability
There was a startling recent forecast that house prices will rise 20 per cent in this cycle.
It was made by respected housing commentator Christopher Joye, who co-wrote a 2003 report commissioned by The Menzies Research Centre for the Prime Minister John Howard’s Home Ownership Task Force.
Sydney property prices are on the rise again. Picture: John Appleyard
When house prices were still in decline last April, Joye forecast a sharp 10 per cent rebound based on an assumption of two quick RBA cash rate cuts.
Some three cuts actually emerged, with Joye noting last week that across Australia’s eight capital cities, dwelling values were now eight per cent above their mid-2019 nadir with Sydney prices leading the way with even stronger capital gains for homeowners.
Interest rate cuts have helped rejuvenate the market. AAP IMAGE/ Tim Pascoe
Joye, the co-chief investment officer of Coolabah Capital Investments, has for years taken up the fight with alarmist claims of the professional property doomsayers. And typically his reasoned forecasts have matched the market movements down the track.
But his suggestion that house prices still have much further to rise is quite troubling when it comes to affordability. Wages are barely budging, and jobs can be very much at risk, yet the costs of health insurance, child care, energy, education and housing are all exploding.
I agree Sydney property price declines don’t seem likely on the horizon this year, other than something unexpectedly occurring from left field. But we could really do with a long price plateau, as we experienced following the boom-bust around 2003/2004.
The cooling between 2018 and 2019 had been good news for first-home buyers, but not dramatically so.
It’s not good news for first-home buyers. Picture: John Appleyard
The latest PRD Affordable and Liveable Property Guide sought to identify affordable Sydney suburbs, and they were few and far between across Greater Sydney.
The guide looks at property trends, investment potential, affordability, project development, and liveability factors. Seeking suburbs able to satisfy either the liveability and/or investment criteria, it incorporates calculating the premium percentage needed to be added to the state average home loan for property purchases.
Despite the market cooling in Sydney, the percentage of houses available in the lowest price range bracket below $500,000 actually decreased with just 0.9 per cent of suburbs fitting the criteria.
It pinpointed affordability in Auburn, Hornsby and Croydon Park for houses and for units Springwood, Auburn, Hornsby and North Parramatta.
“These are the key affordable and liveable suburbs which property watchers should look out for in 2020,” Dr Diaswati Mardiasmo, the PRD chief economist said.
Dwellings priced between $500,000 and $800,000 showed up in 5.3 per cent of Sydney suburbs, the report by PRD advised.
While Dr Mardiasmo suggests there is increasing hope for first- home buyers, it is more so for buyers in Melbourne, Brisbane and Hobart.
“The lowest price range of less than $500,000 in Melbourne and Brisbane and less than $350,000 in Hobart, has truly opened for first-home buyers. Now is an ideal time for first-home buyers in these capital cities to enter the market,” she said.
Originally published in The Daily Telegraph
22 February, 2020
by Jonathan Chancellor
