Sydney housing market will weather economic storm: John Symond
With Australia looking well-placed to cope with any fallout from the IMF cutting global growth forecasts, Aussie Home Loans executive chairman John Symond says there should be strong demand for inner-city apartments in Sydney throughout spring.
"The recent state budget and its attendant stamp duty concessions should see demand rise for apartments in the lower price range," Symond has told Property Observer.
"New units located close to the CBD and public transport link will be the winners in the spring of 2011 – easily beating older units and homes," he says.
"Also fuelling demand for units are empty nesters who are leaving their homes for townhouses or apartment living."
Overall, Symond says the Sydney real estate market continues to cool, as the market still feels the effects of the Reserve Bank's decision to lift rates late last year.
"I expect house prices to be solid in the under $1 million price range, while those above that mark will continue to be soft.
"More affordable houses and units will experience stronger demand as the First Home Buyers still receive State and Federal incentives to purchase.
"While dwellings within 15km of Sydney's CBD have historically performed the strongest, we are now seeing healthy growth in the more affordable suburbs in Sydney's west, such as Blacktown, and this trend should continue."
The luxury end of the market will continue to feel pain, according to Symond.
"Houses in the upper price range, especially in the Eastern Suburbs, will continue to experience softness – with many prices paid in recent months at least 20% below their peaks of a few years ago."
Symond also voiced concerns at the lack of affordable properties in the Sydney market.
"The supply of new rental properties continues to be slow, leading to an acceleration in rents – creating further pressure on those who are keen to get into the property market for the first time," he says.
"Many young people are now effectively priced out of Sydney property ownership and face accelerating rental payments. This problem of affordability should be urgently addressed at both a federal and state level, with new housing lots and units required.
Despite these concerns, Symond says there are "opportunities for the astute purchaser who does their homework, as there is a strong prospect of lower rates over the next few months".
"Banks continue to favour home lending over small businesses and commercial lending and that will fuel growth."
This article first appeared on Property Observer.