Property experts say price increases of 10% in Sydney over the next year aren’t outside the realm of possibility, but growth depends on how the market performs in the next few months and different areas could see higher growth than others.
The comments come after McGrath Estate Agents managing director John McGrath made the prediction this morning that some markets in Sydney could see price rises of 10% over the next year.
That prediction comes after a number of experts and analysts have said the market will remain mostly flat over the next year due to an increased number of listings and fewer buyers caused by higher interest rates.
McGrath was contacted for comment this morning but no reply was received before publication.
The most recent RP Data figures show prices in Sydney grew by just 0.3% in the three months to July 31. For the year to that date, prices grew by 6.5%.
SQM Research founder Louis Christopher says a 10% increase in Sydney isn’t necessarily impossible, but the next few months will determine how the market performs over the year.
“There are some sectors within Sydney where listings have not risen, and those areas tend to be in the inner-city and urban locations, and so I would argue that Sydney is largely just holding its value.”
“Except for the top market where we are seeing heavy discounting, I think the rest of the market is okay. However, I don’t think it’s necessarily rising.”
Christopher says debate around price growth must focus on location. He points to areas in southeast Queensland where prices are falling, in contrast to Melbourne where prices have corrected themselves, but with relatively few price falls.
As a result, he says there may be some areas in Sydney where prices increase by 10%, however unlikely that may be, and the outcome over the next year will be determined by the Spring selling season.
“Spring is going to tell a story, specifically in how many listings we see on the market and how quickly things move. A 10% increase in some areas is not outside the realm of possibility, but it depends on the next few months.”
“I think the most likely outcome is that we’ll see a relatively flat market with growth of no more than 5%. A 10% prediction is not outrageous, but unlikely for the whole country.”
Australian Property Monitors general manager Anthony Ishac says there are some areas of Sydney that could see 10% increases, but again, those depend on location and the types of properties being sold.
McGrath told the Australian Financial Review this morning he believes properties up to $2 million may see price increase of between 7-10% over the next 12 months, although sellers of properties worth above $2 million are waiting for some more activity.
Ishac says this makes sense, given there is so much discounting occurring in the prestige property market, not only in Sydney but markets across the country.
This comes after the RP Data revealed the most expensive 20% of properties recording the highest falls during the quarter to July 31.
Ishac sticks to the prediction certain markets may see rises of 10%, but not necessarily in Sydney and certainly not nation-wide.
“I think it’s going to be difficult to have that type of performance in the next 12 months, even though there is low unemployment. There is going to be subdued growth.”
“It all depends on the location. Different segments perform differently, and the other thing we’re facing is that with Spring there is so much more supply and the buyers have the upper hand. Higher price gains will be difficult, in any market.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
