Chief Economist at the Macro Investor Leith van Onselen shared his 12-month price forecasts for Australia’s capital city housing markets based on consideration of key price drivers: housing finance; housing supply; affordability; and the macroeconomic outlook.
Sydney: -3% to 1%
Relative to the rest of the nation, Sydney’s housing market has displayed resilience, with detached house values declining by 6.4 per cent since peak and unit values remaining flat as at May 2012, according to RP Data-Rismark. This result compares with declines of 8.1 per cent (houses) and 2.8 per cent (units) at the national capital city level.
Over the next 12-months, Sydney’s home prices are projected to perform slightly better than the national average, experiencing a price shift of between minus-3 per cent and 1 per cent.
While Sydney home prices are the most expensive in the nation on a price-to-income basis, due to its relatively attractive rental returns, Sydney’s price-to-rent ratio is below the national average, suggesting that buying is relatively more attractive than renting.
Sydney’s housing market is also relatively supply-constrained, experiencing one of the lowest home construction rates in the nation.
The number of homes for sale in Sydney is also not particularly elevated, and has fallen from this time last year.
In addition, Rental vacancy rates, while higher than last year, are below the national average, as is the average time taken to sell a home.