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What’s the Future Outlook for Sydney Home Values?

While the nominal value for homes may have spiked distinctively, the real value or the inflation-adjusted value of properties have not seen any appreciable growth. Cameron Kusher for the “Research Blog” writes that the scene is definitely laced with gold when you compare it to the times of GFC but home values still leave a lot to be desired. Kusher feels that there is no big change around the corner either.

There are various reasons for such a belief:

1. Investors are fickle in nature

Presently, home values have shot up, backed by investor activity (FHBs, next-time buyers and owner occupiers have not joined the party yet). However, the investors are a fickle breed and adverse news or changing market sentiment can quickly affect them.

2. Debt to disposable income ratio

Our citizenry has a handsome amount of debt on it. The debt to disposable income ratio, writes Kusher, has hit its saturation mark. Being stable for 7 years, it is unlikely to change and thus Australians are not likely to indulge in further debts.

3. Savings-oriented society

GFC has been an eye-opener and it has created a “society of savers” out of us. Our penchant of spending money has been replaced by a penchant to save now. Our level of savings (10.5% for the last 5 years) is at its 25-year high and thus we may not be too willing to spend on upfront costs.

4. Consumers averse to borrowing

Consumers are not too eager to borrow money. Our credit card consumption has decreased on the back of a sharp increase in debit card usage. Thus, it will be sometime before we change our mindset and shift to borrowings (despite really attractive fixed and variable mortgage rates).

Sydney can prosper against the trend

Despite this, Sydney is all bent towards seeing a ‘real’ value growth in coming times. It has withstood a price correction; something which Melbourne hasn’t still faced (the case for Melbourne is like that of a Formula 1 leader who knows that while he is ahead, he has an extra Pit Stop due).

Moreover, housing demand is still very high for Sydney and this makes number of houses quite insufficient- a sure sign of good days ahead.

You can read the original article here.

In my opinion, the recipe is perfectly laid for Sydney to turn on the “price hike” heat from here on. Its population growth will be boosted by skilled migrant inflow which will help with knowledge of overseas practices.

Migrant inflow will also bring about a vast number of people who would like to give their children a great place for seeking education. Naturally, these people will not mind investing in properties here. Sydney home values will undoubtedly be helped with such a turn of affairs.

If development-ready broadacre plots can be finished within time (with council compliances in place), Sydney real estate looks all set to benefit at large.

Do you think Sydney can be the new real estate hub of Asia Pacific?