Property markets in New South Wales remain the country’s best performers
Over the 12 months to August, values in Sydney increased by 16.2 per cent, according to RP Data. As prices escalate, real estate is becoming increasingly out of reach for many buyers.
According to RP Data, 248 suburbs in the city have a median price over $1 million – a 42 per cent increase on June last year. Of the 25 most expensive suburbs in the country, 22 are in Sydney. In addition, the number of properties worth less than $400,000 in the city has plummeted in the past 10 years, now sitting at just 13.5 per cent.
Despite its positive performance, the Sydney market may become a victim of its own success. Rising prices are likely to cause buyer interest to taper off in the inner suburbs and push buyers out of the market, according to Domain Group senior economist Andrew Wilson. As a result, Dr Wilson predicts growth will begin to wind back in 2014/2015 to around five to seven per cent.
The Domain Group forecast predicts budget-friendly outer western suburbs may see growth of eight per cent while blue chip inner areas are likely to languish at five per cent. The upper north, inner west and south are tipped to hit seven per cent while the northern beaches are predicted to see six per cent growth.
Favourable market conditions are fuelling a construction boom across the city. In Parramatta, the New South Wales government is pushing for the construction of 6,000 new apartments over coming years over a 146 hectare site. The development will permanently change the Parramatta skyline, with building up to 53 stories under consideration.
Overall, BIS Shrapnel estimates that 5,800 apartments are currently in the pipeline in the Sydney area and 11,500 more will be released over the next three years. With buyer and tenant demand expected to outstrip supply, the firm warns the apartment sector may face a downturn in the 2016/2017 period.
However, according to BIS Shrapnel, this oversupply is likely to be quickly absorbed and by the end of the decade, the apartment market is expected to pick up speed again.
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