INSIGHTS
April, 2015

Know Your Market: Sydney Hot, Others Not

SHARE
  • Headlines concerning soaring property prices in Sydney are now almost a daily occurrence. However all this focus on Sydney and a potential ‘bubble’ is masking the lacklustre movement in other property markets around the country. Simply put, Sydney is not Australia and local economic factors are playing a more significant role than changes in interest rates. So what has been happening around the country?

 

Overvalued, Undervalued

  • The latest data from RPData indicates that the house price index rose slightly in all capital cities in March (1.4%), and over the quarter dwelling prices increased by 3%. After many months of apparent rampant growth, this constituted the lowest point since September 2013 which would suggest that the housing market is finally moderating.

 

/></p><p> </p><ul><li>However these numbers should be taken with a grain of salt as they are inevitably inflated by the Sydney market which has increased by 13.9% over the past year, well beyond even Melbourne (5.6%), while the rest of the country has either dipped into negative or is simply cruising on stable (Brisbane 2.7%, Adelaide 2.2%, Canberra 1.5%, Perth -0.1%, Hobart -0.3% and Darwin -0.8%).</li><li>Indeed, after such a flurry in the Sydney market the median price for a house has reached a whopping $781,600, while the median price in Hobart is less than half at $340,000. This is the result of successive increases in house values in Sydney for the last ten years, but especially in the last year when cheap credit, negative gearing and SMSF’s created a seemingly unquenchable demand for property in Sydney, but not in other markets.</li><li>SQM Research believes that the Sydney property market is now overvalued by 25% and predicts that by the end of the year it will be overvalued by 40%. This will be the second highest overvaluation SQM Research has ever recorded, with the highest in 2003 when the market was overvalued by 55%. As the graph below clearly shows, this overvaluation eventually led to a (negative) re-adjustment.</li></ul><p> </p><p><img decoding=

SHARE
Back to Insights and News

Related articles

All insights

Will the rate cut bring back property investors?

February, 2025|Housing Market, Finance
The number of new loan approvals to property investors has fallen for the first time in almost two years, according to data from the Australian Bureau of Statistics (ABS). As higher borrowing costs and cooling values in some state capitals affect the outlook for residential property, investors are deciding whether to hold off on purchasing…
Read More

What’s ahead for the housing market?

January, 2025|Finance
Australia’s housing sector is poised for modest price growth in 2025. Will this create opportunities or challenges for those looking to enter the market? According to PropTrack’s Property Market Outlook, national home prices will rise between 1% and 4% in 2025. This is slower than the 5.5% growth seen in 2024, as high interest rates,…
Read More

Signs of a housing cooldown in Sydney and Melbourne

December, 2024|Housing Market, Real Estate
Home values in Sydney and Melbourne have dipped for the first time in nearly two years, following a period of rapid growth. With house prices outpacing incomes and persistently high interest rates, could this signal a cooling market? According to recent data from CoreLogic, Sydney’s home values declined by 0.1% in October, the city’s first…
Read More