With the Domain House Price Report predicting the end of “the great Sydney house price boom” due to house price growth recording sharp declines over the September period, the media and economists are now saying that Sydney’s price bubble has finally burst. But has it?
Business Insider Australia note that the explosion in property prices has been driven by the current supply shortage and a surge in demand from elsewhere, such as migrants and foreign investors. The question now is whether people will continue buying as they become fearful about entering at the top of the market, even though interest rates remain low, and are possibly about to get lower with Credit Suisse suggesting that the RBA need to take interest rates below their current level of 2%.
But then there are comments from Property Investor’s Pete Wargent suggesting that the New South Wales economy is powering Australia’s economic growth, and ANZ’s stateometer shows NSW both above trend and accelerating across a range of economic indicators, from labour market conditions to house prices.
And this week Treasury secretary John Fraser, Australia’s top economic bureaucrat, weighed in on the debate saying he is not concerned about a housing bubble in Sydney or Melbourne bursting and causing severe financial instability because there has been a healthy increase in supply in recent months.
So it seems even the bureaucrats are undecided as to where Sydney’s property market is heading.
What are your thoughts – is Sydney about to bust or continue to boom?
Let us know by leaving a comment below.