news

Bleak long-term outlook for Sydney

As investor numbers continue to climb, a leading property expert has warned the Sydney market has weak prospects for continued growth.

Investor participation in property hit a new high in May, accounting for 46.9 per cent of NSW finance commitments, according to the Australian Bureau of Statistics.

Yet RP Data research analyst Cameron Kusher warns investors may have already missed the boat.

“While value growth has been strong in Sydney recently, and attractive to investors, the best time to enter this market was more than two years ago – not now,” he said.

In his view, the market has a weak long-term outlook and is likely to underperform compared to other capitals.

“Although growth is currently quite strong, recent history has shown that Sydney values rise at a more moderate pace than other capital cities,” he said.

According to RP Data statistics, Sydney home values rose by 263.7 per cent over the past 20 years.

In the same timeframe prices increased by 359.4 per cent in Melbourne and 315.9 per cent in PerthPerth, TAS Perth, WA.

Mr Kusher warns the last time investor activity climbed to such levels was in late 2003, just before the market begun to decline.

From the market peak in March 2004 to December 2005, values dropped by 8.2 per cent, he said.

He also cautioned investors with a short-term view that they may find it difficult to pull out if values begin to fall.

“The cost of investing in housing is high and it isn’t a liquid asset so exiting a property in a weak market can take a long time plus the exit costs can be quite high once you factor in costs such as agent commissions and conveyancing fees,” he said.

Bleak long-term outlook for Sydney
SPI logo
Thank you.

Your enquiry has been sent to a local Aussie Mortgage Broker.

We will be in contact with you shortly.
Opps.

error occurred.
Unfortunately Aussie cannot attend to your home loan related enquiry at this stage as you must be a citizen or permanent resident.
Do you need help finding the right loan for your investment?
What Aussie do for you:
  • Give expert mortgage advice to help you find great investment loan deals
  • Help you maximise return by lowering financing costs
  • Save you time and effort by helping with the paperwork
First name
Last name
Location
Mobile Number
Are you an Australian Resident?
promoted stories

Top Suburbs

Highest annual price growth - click a suburb below to view full profile data:
1.
BLUE BAY 49.18%
2.
PAMBULA 43.5%
3.
BERKELEY VALE 42.74%
4.
POINT PIPER 40.52%
5.
NORTH TURRAMURRA 38.12%