“Confidence, boom, good times.” These are the words that mortgage broker Redom Syed used to describe the Sydney property market at the moment, highlighting the capital city’s great potential for recovery in the near future. Should investors jump back into Sydney right now?
Following several months of significant declines in property values, Sydney has started to see confidence improve once again after the conclusion of the federal elections.
In fact, Mr Syed said that the current condition of the capital city market reminds him of the better days in 2016 when a single property easily gets multiple bidders.
“I pick up the phone at the beginning of the day and they’d tell me that they’re starting a negotiation on a property. They think it’s probably gonna sell for $900,000 but, by the end of the day, they’re paying close to 10 per cent above that. Multiple bidders just driving up the price,” according to him.
“There’s a low level of existing stock at the moment, at least for existing dwellings. Home buyers are paying a little bit more now than they would have two or three weeks ago.”
As buyers regain their confidence and ultimately improve investment activity in Sydney, Mr Syed expects prices to go up across the capital city.
Once property values start to improve, vendors who have been reluctant to sell in the past few months are then expected to get back into the market, thus beginning another cycle as an improved investment activity drives the market towards a supply-and-demand equilibrium.
On when exactly to jump back into the market, the mortgage broker advises investors: “I’d say after June might be a good time.”
Overall, the Australian property market is bound to see significant improvement moving forward, driven primarily by rate cuts, according to Mr Syed.
The mortgage broker said: “I would say, in the short-term, there could be a boom because of rate cuts – they drive people to buy property. There’s more people looking to buy so prices go up, demand goes up and, over time, supply reacts.”
“Although I wouldn’t necessarily call it a property boom. I would say explosion of interest rather… Confidence is back.”
Moving forward, as an investor, Mr Syed plans to look towards the “premium Sydney property market” for wealth-creation opportunities, or properties within the $1.5 million to 2.5 million-bracket.
While the price tag seems too hefty, the mortgage broker predicts an increase in demand within this market because of the proposed changes to financing, including APRA’s recommendation to lower the assessment rate for home loan applications.
“These changes really targets the premium markets. The people who are buying in those markets are probably going to see an increase in demand, particularly in inner-ring Sydney, as well as other areas that typically have supply constraints.”
Even Brisbane and Melbourne, which have also seen declines over the past months, will benefit from the proposed changes on financing.
“I think we’re going to see an environment that’s very different from today, where confidence is back and prices are a little bit higher than where they are right now. Maybe people will actually be saying the word ‘boom’ and mean it, I don’t know, but things are really starting to swing in that direction right now,” Mr Syed concluded.