There have some unusual attempts to talk down the Sydney property market in the last few weeks...is it a seasonal lull or the start of a downturn?
There were some big results, too, including this art deco two bedroom apartment in Neutral Bay which sold for a thumping $777,000, among other examples, including in Pyrmont.
There had also been some misguided reports about prices 'falling' in May, which I as explained here were due to seasonality in the index in question, rather than prices actually falling.
Granted, the market is certainly less manic than it was in November and December 2013, but there is still an awful lot of demand out there, from investors in particular, as tomorrow's ABS Lending Finance data will likely confirm.
And while plenty of new apartment supply is due to hit the market, we're a long way from that supply meeting the pent up demand yet (not to mention that city-wide vacancy rates of 1.7% are a million miles away from the 4.3% vacancy rates we saw at the end of the preceding boom a decade ago).
And BIS Shrapnel agree apparently, forecasting Sydney's median apartment price to rise by 15% in the next two years.
6 reasons why...
In fact, with dwelling prices rising and ongoing low deposit requirements, investors have significantly more equity in aggregate than they did two years ago.
Thirdly, fixed interest investments in this country are paying poor returns.
While you might argue there isn't much value in Sydney real estate, equally, as Roger Montgomery has been arguing for weeks, there is no value to be found in the Aussie share market now either.
Ultimately, capital needs to find a home, and increasingly, its home is becoming...well, homes.
Fourthly, interest rates are heading lower, probably through another cut from the Reserve Bank to a cash rate of 2.25%, the reasons for which I discussed here, and in any case because banks are slashing borrowing rates independently of the RBA, asdetailed here.
Fifthly, rents are surging, which has kept gross apartment yields propped up at 4.7% in Sydney.
Yields are not as good as they were, but they have still not declined to the levels which will turn investors away completely while mortgage rates remain available at similar levels.
Homebuyers tend to stop buying property when renting becomes an equivalently far more attractive option.
However, Sydney's apartment rents are surging, up by another 5.3pc in the last year.
The cost of renting a house in the inner west has risen by 25pc in the past five years, and median unit rentals are up by 19pc in that region.
Over the past five years in the eastern suburbs unit rents have increased by 21.9pc, to $585 per week.
In other words, renting is still not really that attractive an option for many punters when standard variable mortgage rates are available from only 4.65pc and rents continue to surge higher.
Unsurprisingly, there has been a huge surge in demand for buying Sydney apartments from foreign buyers.
The next downturn
It's actually this sixth point which makes me believe that inner Sydney is the best place to invest in property in Australia.
It was instructive to read Gordon Brown's memoirs which noted how when the global financial crisis struck and the Q2 2008 mortgage data filtered through to him it "made his blood run cold", because he knew that with mortgage demand dropping by a third, the UK was heading for a certain recession:
Brown knew exactly what a dramatically shrinking debt market could mean for the British economy, specifically recession, and perhaps even a depression if the deflation in borrowing could not be stemmed.
When a really significant downturn hits Australian shores, we will likely see similar policies implemented, and in particular, I believe, we could see another relaxation of foreign buyer restrictions in order to help prop up the flailing market.