Recent Home Living Property Culture The Team
Recent Home Living Property Culture The Team
Property

THE SYDNEY MARKET - 2017 QTR 2

05-Jul-2017
Supplied by Property Analytics


For 10 meetings running, the RBA (Reserve Bank of Australia) has kept the cash rate at 1.5%. You don’t have to be an expert analyst to understand the affect that cheap finance has on Sydney real estate.

Property prices continue to rise. With record low interest rates available, it’s hard to see values dropping any time soon, but some forces are at play that should see growth moderate further: restricted lending to property investors, taxes on overseas purchasers, and an increasing oversupply of apartments.


Property Investors
The banks, mainly at the behest of APRA (The Australian Prudential Regulation Authority), are making it more expensive and more difficult for investors to attain finance. Property Investors are paying an extra 0.5% premium on mortgages compared to typical owner-occupiers; interest-only lending – most popular with investors – is widely discouraged; and, the hurdles to securing finance, like required deposits and income, are getting more arduous. The result is reduced investor lending across all states apart from Tasmania.


Foreign Purchasers
Borrowing has become more difficult for foreign purchasers as well, with most mortgage providers refusing to consider any overseas income (even from Australian citizens). New taxes, purchaser statements, and other initiatives have acted to gradually lessen demand from offshore buyers. Overseas property investors are overwhelmingly focused on Sydney and Melbourne, so our city will be impacted more than others by decreased foreign investor activity.


Apartment Supply
In their last statement, the RBA stated “In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years.” If you were to drive around most Sydney suburbs, you’d see this is a statement of the obvious, and not just for the inner city. Who’s overwhelmingly been purchasing apartments in recent years? Investors and overseas purchasers, that’s who. It looks like the market is already responding to all of the above... CoreLogic reports that Sydney property prices increased 0.8% in the June quarter, down from 5.0% reported in the March quarter.

Reading this might make you feel pessimistic – don’t be. Growth may be moderating, but prices are still going up. In fact, they’re up 12.2% now compared to this time last year. The key realities remain: demand for quality property in good locations is high, while supply is low; strong international and domestic migration into Sydney continues; and, there is little sign of the RBA lifting borrowing rates any time soon.

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