Sydney slowdown fears premature

Thursday, 12th June 2014

A new report from BIS Shrapnel has said that recent concerns around a Sydney property market downturn are ‘premature’ with strength expected over 2014/2015 and 2015/2016.

According to BIS Shrapnel, behind the strength of the property market are low vacancy rates, low interest rates, relatively attractive yields and the expectation of capital gain.

BIS Shrapnel’s Apartments in Sydney Suburbs 2014 to 2019 report points to strong off the plan sales, which will underpin further rises in new high density apartment construction.

No oversupply is expected, but vacancy rates should ease and reduce pressure on prices ‘by the time the Reserve Bank starts looking at tightening interest rate policy’ the report notes, suggesting that off the plan sales will come off their peak over 2016.

Here is a look at some of the key figures;

  • $45 billion total borrowed in the 12 months to March 2014 for the purchase of residential property in New South Wales
  • 76% the proportion this is above the 2010/2011 total
  • 9,932 high density dwelling approvals in 2010/2011
  • 20,354 high density dwelling approvals in the year to March 2014
  • 18% the estimated amount Sydney unit prices have risen over the past two years
  • 15% forecast increase in unit prices over the next two years

Overseas buyers’ influence was also noted by Zigomanis, noting they’ve been buying apartments within inner Sydney and selected centres.

Gen X and Gen Y are also starting to contribute, with owner occupiers’ presence growing. Notably, however, investors are still the overarching dominance in the Sydney apartment market.

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