Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Friday, 6 February 2015

Strong gains for Sydney in 2015 (+50 percent in 3 years?)

From Property Observer yesterday:

SQM's Louis Christopher considers that this week's interest rate cut could lead to Sydney dwelling prices recording enormous gains of 50 percent across only 3 years:

"Christopher's confidence in the Sydney market remains, particularly given the Reserve Bank's February announcement that it would cut rates by 25 basis points to a record low of 2.25%.

"We believe Tuesday's interest rate cut will further stimulate the Sydney housing market through the full calendar year 2015," Christopher told Property Observer.

"Our forecast for this current year, made back in September 2014, would be a rise of between 8-12%."

"This assumed a stable interest rate environment. With this rate cut we believe the market will now likely increase by the upper end of this range.

"Sydney on top of the 30% gains we have had since the start of 2013 will mean the market may well be up by over 50% in Sydney in just three years."

As the article notes, my forecasts were softer, while noting acknowledging the risks of an upside overshoot.

Although when the forecasts were made I did feel interest rates would probably fall, I hadn't expected that we would see a 2 percent cash rate early in the year, which we now might.

Long way to go, though...