Overall the Sydney house prices are likely to decline by 0-4 percent in 2011 while the rents are likely to increase by more than 7 percent.
Here are some Sydney house prices and rents predictions for 2011.
(1) Vacancy rates to remain tight for most of the market and that means at least 7-9 per cent plus rises in rents for 2011.
(2) Building approvals to soften as investors largely stay on the sidelines following very high interest rates.
(3) Outer ring in Sydney, particularly the south-west and west, will outperform in rents and capital growth. The affluent end of the market is going to underperform once again. And watch out for properties around the $1 million mark – they are likely to be discounted most.
(4) The 2011 average home loan interest rate will not go over 8 percent otherwise the Sydney property market will be hit too hard.
Here is the 10 years trend chart of Sydney house and unit prices.
Patrick,
“2011 average home loan interest rate will not go over 8 percent otherwise the Sydney property market will be hit too hard.”
If you think interest rate decisions are made based on some narrow minded view of Sydney property investment your living in an oxygen free bubble. Seriously, that is the most ridiculous, idiotic statement I have ever seen to justify a deluded Sydney-centric personal bias on why RBA and global interest rates shouldn’t rise.
Go and read some wider economic views and data and then come back and justify that statement, I’d like to see that !
Please note it is the average home loan interest rate! The current average rate you can get is more likely around 7.20%. Although the banks’ rate is about 7.8%, you can normally get at least a 0.5% discount. Plus some lenders offer even lower rate, so overall the average interest rate is now should be 7.20%. In order to increase the rate above 8.0% in 2011, there should be at least 3 25 basis points rises by RBA. I cannot see that the RBA will increase rate in the first quarter, so this means one 25 points rise for every quarter for the remaining quarters. Don’t forget even this happens, the average home loan rate is only 7.2%x0.25+8.0%x0.75 which is 7.8% – this is still lower than the 8.0% prediction.
Today, I just read an news article. According the article, a Scotiabank analyst, Adrienne Warren, said that after the recent pause in rate increases, the Reserve Bank will resume gradual policy tightening, with short-term rates rising by an additional 75 basis points by the end of next year.
I believe this further suppose my argument on the statement “The 2011 average home loan interest rate will not go over 8 percent”.
Here is the “Australia leads world in house price rises” article.
This is an article “Horror story on property? I don’t think so” published by Peter Switzer on Yahoo.com.au. I think it is a very interesting one.
Major points:
(1) … but it still does not prove that we have a bubble that will burst sending house prices down by 40%.
(2) Even the IMF has recently argued that our high population growth plus rising exports along with better disposable incomes, in concert with a scarcity of land for development have contributed to the surge in home prices and “these factors were likely to support high house prices over the next years.”
Any chance that it would decrease? When would that be?
You will see rates rise and houses in CBD and surrounding districts fall in price. Units will keep a slow pace and then a rapid decrease in value towards the first half of 2012. The bubble is here. Thw Govt will try the reduce the rate of fall. But cash in the hand will talk…