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Sydney House Prices to Drop in 2016

housing-industryAn article on the online edition of The Adviser throws light on the precarious territory which Sydney real estate may move towards in the year 2016. From being a show-stealer in 2013 and 2014, it may turn into an also-ran city next year, when Sydney house prices are expected to register less than 4% growth.

Slowdown already underway

Compared to the 12.8% growth registered in 2014, Sydney’s growth is expected to mellow down to 7.7% this year, and to 3.4% in 2016. For comparison, Melbourne’s the growth was 5.4% in 2014, 6.6% this year and is expected to come down to 3.5% in the year 2016.

The NAB panel

The NAB panel which came up with this residential property survey is made up of professionals from various fields, including but not limited to, developers, valuers, fund managers, and property operators.

You can read the original article here.

There are so many different opinions on the anticipated growth of Sydney real estate. There are those who feel the NSW capital city will actually even have to work real hard to register that predicted 3.4% growth in 2016. Then there are those who feel the growth might still be so electric that the RBA may need to step in at some stage and bring in micro-prudential measures.

Sticking close to fundamentals of economy

I think the market is sticking close to its intrinsic values and until the day low interest rates do not add to inflationary pressure, the lack of GDP growth won’t hurt. The household leverage being as high as it is, and expenses, debt and inflation-adjusted income making a reasonable troika, there is no point forecasting an economic storm that will take a serious toll on Sydney house prices.

The fundamentals of economy are not against it and it has gotten a second wind after minor corrections in prices. All this may mean that the Harbour City will beat naysayers and run along its merry course, reaching new median values (in case you missed out, it has shot past $900,000 in median house values for the March quarter).