Sydney house prices could increase by as much as 20 per cent next year, with low interest rates, strong employment and rising confidence creating a perfect housing storm according to Louis Christopher from SQM Research. In its housing boom and bust report – SQM Research believes Sydney will be at the forefront of the housing market recovery next year.
In fact, there’s actually a boom predicted, with prices expected to rise between 15 and 20 per cent. That’s provided there’s just one more interest rate cut and possible a rise after the middle of next year.
This is amazing news for investors who have been waiting for so long for prices to rise in Sydney but obviously makes it much harder for investors still trying to get into the Sydney market. Melbourne and Perth prices are also expected to grow by up to eight per cent, Brisbane by seven per cent and Darwin and Hobart by six per cent. Adelaide prices should increase by five per cent but Canberra prices are predicted to drop by up to four per cent.. as a result of cuts to the public sector there. The Gold Coast might finally make a comeback in 2014, with SQM Research reporting some modest growth there, thanks also to the falling Australian dollar, which is helping bring back tourists. Byron Bay is also looking quite strong but Coffs Harbour is still struggling.
Balancing all that good news – Property market commentator Christopher Joye believes housing growth might now actually go too far and create dangerous conditions when rates rise again. Joye says about one third of all home loans have a loan to value ratio of above 80 per cent and about 15 per cent of loans are above 90 per cent LVR. This means there’s been a relaxation in lending standards and Joye believes the RBA should force the banks to ask for 20 per cent deposits, which would help slow the market down and prevent a possible crash if the market gets overheated.