For a brief video conversation regarding this information
It seems that the higher level of interest in the Real Estate market of late has been largely driven by buyers working on popular information about returns on investment, future profits and mainly, livability in Sydney.
It is certainly now obvious that the market is driven by the media using this already captive audience as ‘click bait’ and gathering a new audience by joining the drama and it isn’t helping buyer sentiment.
As an agent, it is important that our buyer pool is confident and healthy and our vendors are too, so it would be obvious that I would side with the industry over the media. However, the media offered us great advertising for the positive and strong time during the market, just before the tipping point.
I think we would have still definitely seen a softening, it was due but it isn’t the end of the world.
The Macquarie bank was misquoted when a suggestion was headlined that the market would drop 7.5% by March next year. Inside sources have suggested that this was an isolated comment regarding new developments and ‘off the plan’ apartments. This saw a few minutes of airtime and disappeared quickly, but the impact was made.
There has been fresh reporting of a Chinese brokerage offering $0 down mortgages for nationals for foreign investment into Australia. What hasn’t been covered as much, thus far, is that these mortgages carry a 14% interest rate for the borrowers, which may iron out any speculation that this will damage the market for first home buyers and low income earners looking to invest. We may actually see the opposite effect on these incoming investors.
further to this point, these loans are for specific developments, I am lead to believe.
All this seems to do, is one thing, decrease buyer sentiment and put increasing pressure on vendors which will lead to a softening of the marketplace. However, ironically, that will lead to stronger buyer sentiment, which sparked the last boom and I believe will spark the next boom sooner than we have seen traditionally.
The thing to remember is prices in Sydney go up, generally increasing at double digit percentages year on year when looking at median growth over a 5 to 10 year period. And isolating certain years, especially recently, growth in most parts of Sydney has been in the 10’s or 20’s over calendar years, and more on a rolling 12 month scale at any given time.
So whether the market softens or continues, there is money to be made in the Sydney market by both buying and selling. In fact, when read in context, most criticism of the current market has been that the growth has halved, not the prices and with growth at double and triple the norm, halving is no issue.
The Median sale price:
Wahroonga September 2013: $1,375,000 compared to September 2015: $1,427,000
Turramurra September 2013: $1,275,000 compared to September 2015: $1,880,000
And, for instance Bondi September 2013: $1,385,000 compared to September 2015: $1,510,000 however, it is shocking to see that in Bondi in September 2014 the median sale price was $2,342,500 but I haven’t seen media publications slaughtering the isolated postcode for peaking before the rest and dropping by almost $1,000,000 this year compared to September last year. That’s because the market fluctuates up and fluctuates down, and at times certain areas are more volatile than others. Isolating specific areas is dangerous, which seems to be the case now with Sydney’s west, which is probably one of the best areas of investment and seen a lot of negative feedback in the media, market wise.
This aforementioned statistical breakdown is to serve one purpose, prove growth and prove volatility because without growth and volatility any market will suffer a continual spiraling demise.
Thomas Merriman.
Thomas Merriman 