Is Sydney housing market really that overpriced?

The Economist’s latest annual global house-price index revealed that Sydney is among the world’s top 10 major cities where increases in property values are considered “unsustainable,” according to News.com.au

Despite a 4.5% decline in 2017, Sydney home prices were still ranked seventh on the global cities index with prices “overvalued” by 50% when compared to average household incomes in the city.

Demand, supply, “the cost of money,” and foreign investment were identified as the foundation for Sydney’s upward-racing property market. Clearly, these four elements were in harmony over the past few years – which resulted in a property boom and, eventually, higher prices.

Before prospective homeowners fall into a panic, The Economist’s noted that property prices are likely to experience a downturn this year.  “The report notes that the average rate of house-price inflation across the overvalued cities has slowed, and in Sydney’s case, fallen from its peak,” stated News.com.au.

Additionally, the demand is currently low, and Australia has been registering less foreign capitals. These factors will eventually push the prices lower.

Meanwhile, CoreLogic analyst Cameron Kusher, in his interview with The New Daily, emphasised that the declines can be associated with the fact that buyers are already priced out of the market.

“It is clear that on a historic basis housing costs are expensive and values are falling indicating that the prices that people are seeking are not prices that potential buyers are willing to meet,” he said

Figures released last month supported this idea, as they indicated that the number of buyers actively looking for a home fell by about a quarter in 2017. This occurrence consequently pushed the median price of a Sydney house, down 14% and the median unit price down 7.9%.

Sadly for some, the Daily Telegraph also reported that Sydney real estate will not rebound anytime soon. Economist Nerida Conisbee said “the market instead looked more likely to bottom out by early next year.”

“There is nothing to suggest prices will be going up at all this year, outside of a few areas,” she quipped.

Conisbee told homebuyers to take advantage of the “favourable” buying conditions that had not occurred since the financial crisis in 2008.

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