Pete Wargent blogspot

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

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Thursday, 28 May 2015

Sydney dwelling prices rise again

Sydney leads dwelling price cycle

Residex released its latest dwelling price indices for the month of April 2015.

Unsurprisingly, Sydney once again showed the strongest price growth with house prices rising by 3.8 per cent over the past quarter and 15.1 per cent over the past year.

Unit prices in Sydney rose by 2.7 per cent over the past quarter to be 12.2 per higher than a year ago.

Price growth has slowed in Melbourne, and has generally been fairly soft elsewhere, particularly across much of regional Australia.

Sydney rents also continued to rise, both for houses, which are up by 8 per cent over the past year, and for units, up by 4 per cent.

Average rental yields on Sydney apartments have continued to hold up at 4.6 per cent, which is one of the reasons I expect prices to keep rising for some time to come yet.

In fact, I expect to see Sydney prices snap 15 per cent higher on these indices based upon what I have seen playing out at auctions in recent weeks.

Another key driver is that there is so little stock for sale.

As for the alleged Sydney "oversupply", I'm not seeing it on a city-wide basis, except in a few pockets as documented here previously.

Construction of apartments has certainly picked up, but only a relatively small proportion of new builds are in the inner suburbs where a high concentration of people want to live.

Inner Sydney vacancy rates have declined again to 1.7 per cent.

Meanwhile, population growth has accelerated in Greater Sydney through 2014 as net interstate migration has declined to its lowest level on record. 

Over the 10 years to 2014 the Greater Sydney population increased by 623,000 to 4.84 million. The inner city is more or less full.

And at the current rate of progress, the next decade could see stronger population growth still.

No oversupply, then, only certain pockets where a glut of apartments is happening.

Traditionally at this stage in the property cycle we would expect to see investors spreading their wings into Queensland and elsewhere.