Sydney’s Property Market Growth Has Been Spectacular

There comes a time in the property cycle when even the most bullish markets have to mellow down and look for sustainability. To an extent, this is something we may expect of the Sydney housing market in 2015. This said, there is no shying away from the fact that it has shown phenomenal capital growth over the last year and should continue to perform way above the national average.

Sydney’ story has been different from that of other cities (discounting Melbourne)

Take the story of Perth, Adelaide, Darwin and you will figure out Sydney is a bird with really exquisite plumage. Even as high vacancy rates and poor rental yields ail certain areas of our countries and others get caught in low capital growth, Sydney continues to bedazzle in both respects.

What bubble? Bubble is a far-off prospect

Sometimes, investor make the mistake of assuming Australia is running through a property bubble but these guys will have to look from a vantage point and they will find that a different drama is being played out in Sydney and quite a different one in places like Hobart and Darwin.

Oversupply can be a concern, too

While we are on it, we need to know that oversupply can also kill and we have found it in the case of the Brisbane market which may start reeking of high vacancy rate sometime soon. If this does not happen, we will definitely see the alternate story of “extremely low rental yields” unfolding. Sydney is well guarded even in this respect. In fact, no matter how strong the supply is, the harbour city can absorb it way faster than it comes.

Sydney has risen from a long slumber

I think that Sydney’s dramatic property market growth can also be put down to long years of slumber. Properties aren’t trading very high (if you adjust for inflation). It is just that they were so much below the average that their growth has seemed phenomenal. I wouldn’t worry much with the ‘bubble’ bit because Sydney has not yet lost track of the intrinsic values.

Even if that day comes, this unique market will have enough in the tank to answer the question of sustainability. To put in different words (and this is no wordplay), in its rise, Sydney is not behaving like a glutton and when it will correct itself, it won’t be like a leaking tap either. Both phases of the market, I believe, Sydney can tackle in a patterned way.

What rate of capital growth do you predict in 2015 for Sydney?