We are always being asked what we think will happen to Sydney’s property prices. So, instead of polishing my crystal ball, I decided to go and listen to what Bill Evans, Westpac’s chief economist, had to say about the market.
Firstly, he is convinced that interest rates will rise, though probably not till after Christmas, with another 1-2 rises to follow sometime in 2011. Usually interest rate rises mean a slowing of the property market, though not always, as we saw earlier this year.
He is also predicting that banks will place further restrictions on funds available for mortgages. So, this should result in less buyers which, in turn, should impact price growth. He doesn’t believe we have a housing bubble, however, so don’t expect any dramatic falls in prices.
Further pressure on price growth comes from current high affordability (or should we say “unaffordablilty”) levels, however in the Sydney market there is still an unmet demand for new housing that could offset this.
Consumer confidence in the property market a year ago had one in two people saying property prices would rise. This went up to 90% at the market’s peak and is now falling. Consumers seem to be pretty confident in the overall economy but the researchers are saying that the man on the street is concerned about his own family’s fortunes.
We know that price growth has already slowed, from 15% in 2009 to around 8% 2010 year to date. Bill is predicting that prices will now remain level for the next 18 months.
After Bill Evans finished his presentation, I overheard two people talking and one said “I can’t believe I missed the property boat”. I asked her whether she was intending to sell a property. She said that no, she wanted to buy a property. This illustrates how consumer confidence can affect a person’s perception of a good time to buy. This could be a great opportunity for buyers! She hasn’t missed the boat – the boat has merely slowed down to pick up more passengers!
Published:- 18 September, 2010
Please note: Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.