The June quarter reflected a 5% gain in Sydney houses and 3.3% for units which is the highest quarterly growth in 18months. Amidst speculation of another interest rate rise in August, July growth slowed down but still recorded a 0.9% gain across the city. Sydney was the first major capital to defy gravity, and now most of the nation is going up except for Hobart. Understanding how today's key drivers counterbalance is the key to confidently navigate this transitional market.
On the 5th of April of this year the reserve bank announced the first rate pause in nearly a year, which was enough to boost confidence resulting in capital growth in Sydney. Last week a second consecutive hold on interest rates has sparked a positive shift in short term sentiment throughout our industry.
Inflation is still high but lowering and it remains the reserve banks priority to bring it back in line. If the lowering inflation trend does not continue in the very short term, we will see another rate rise which may pause the current momentum in the market.
Aussie mortgage holders will feel more the pressure in the coming year. This pinch will inevitably attribute to some stock, especially when many 3-year low % fixed rates mature over the next 12months. I expect by the time many are nearing their critical stress level next year interest rates will be coming down and borrowers' will demonstrate the same resilience that we have seen many times in the past.
Migration will be the highest on record in Australia with 400,000 expected by the end of the year as people take advantage of eased border restrictions. Over the next 5 years, new home building will fall to a 10-year low and collide with the arrival of a record 1.5 million migrants, Students will make up half this number. People won’t just get off the plane and go and buy a property however they will need to live somewhere and rental demand for housing will fuel confidence and higher rental yields will increase borrowers assessable net income when they borrow.
Local rental values have soared by 22.85% over the past 12months which has stimulated more cash investors to re-enter the market particularly for apartments. Stock levels across flooded apartment markets such as Mascot have significantly dropped over the past 12 months and as a result gaining momentum and price rises. Expect this trend to continue. Double digit price growth over the next 6months is a real possibility under this set of conditions.
In other local news construction is fully underway at La Perouse building the controversial Kurnell - La Perouse 'Kamay Ferry Wharf'.
This 180m long wharf will feature a daily ferry service to Kurnell next year and also provide boat mooring facilities for private and commercial vessels up to 20m. This project was met with local resistance however, will ultimately boost local business and awareness of Botany Bay and it's surrounds which has always been in the shadows of Sydney Harbour.
Billy Couldwell's Key Points;
- Strong quarterly growth across most of the country
- We are likely at the top of the interest rate cycle
- Rental values continue to surge
- Migration expected to be highest on record
- New construction at a 10 year low
- Lack of housing & migration are outweighing mortgage stress impact on market
- We are in a new upward growth cycle
- Surplus stock in oversupplied local unit markets has now been absorbed
- New ferry wharf at La Perouse expected to boost surrounding suburb interest
Past 3 months sales data by council area - South Eastern Sydney
Contact me for any real estate advice whatsoever
Billy Couldwell
M 0416 713 721
Licensed Real Estate Sales Expert
NG Farah | Kingsford | Mascot | Coogee | Malabar