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Recent Home Living Property Culture The Team
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THE SYDNEY MARKET - 2016 IN REVIEW

22-Feb-2017
Written by Property Analytics

Photo by Liam Pozz (Unsplash)

When analysing current market conditions and anticipating future directions, it’s important to take into account historic market trends. How has Sydney real estate performed over the last few decades?

House prices in Sydney increased 26 years of the last 30. At any point in time since 1987, the likelihood that your house was worth more than it was the previous year was greater than 4:1 (values were up year-on-year 103 of these last 120 quarters = 86% of the time). That’s why we say ‘safe as houses’, because of the consistency of asset growth over time.

House prices increased for about 12 years straight in Sydney, from 1993 to 2004, according to Australian Bureau of Statistics figures. During that time, prices went up about 150%.

Preceded by a few years of stagnation and some sharp market bumps related mainly to the GFC, the growth cycle we’re currently in began mid-2012 (less than 5 years ago). During this time, house prices have gone up about 55%.

Viewed in the fullness of time, market trends over the last 5 years are by no means unusual. The significant value growth we’ve seen is not unique in historical terms; some of the drivers may be a bit different (e.g. US/UK foreign investment then compared to East Asian investment now, road/train infrastructure then versus record low borrowing rates now), but ultimately, the underlying attractiveness of Sydney real estate to investors and homeowners remains.

There are many international and domestic questions likely to be answered over the coming 12 months that could help shape the Sydney property market: how fast and far will US interest rates rise; what will trade under Trump actually look like; how will China’s economy and geostrategic moves play out; will the confidence of Australian businesses and consumers finally stabilise in a positive way; and can our federal government pass meaningful legislation aimed at addressing renewed concerns around debt, the economy, and labour markets.

We live in interesting times, where decades of increasing globalism are being challenged by emerging nationalism movements (Brexit is just one example), and where open cynicism in – and occasional hostility to – democratic institutions and leaders has become commonplace. People all over the world are feeling a bit uncertain, and have been for some years. These macro trends have likely contributed to two key metrics that continue to work in the favour of Sydney property owners: record low interest rates, and continued imbalance between supply of properties and buyer demand for them.

While few things are certain, history suggests that continued price growth in 2017 is imminently possible, albeit at a more sustainable rate.

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