Sydney Market Update
As we move into the heart of the Spring selling season, the Sydney property market languishes under a mist of uncertainty. Two factors will continue to hinder any real price appreciation moving forward.
Firstly bank lending, which we have discussed previously, continues to hinder buyers. Bank wholesale borrowing costs ticked higher and as expected they passed those costs onto borrowers via higher mortgage rates. They have also taken a very conservative approach gearing with many institutions only prepared to lend at 50-60% of the valuation level of homes. As an example a family looking to trade up to a $2m home would need a deposit of $800,000 plus additional savings for costs like Stamp Duty and legals. Not a situation that many families would be prepared for.
Secondly and perhaps more importantly in the medium term is the imminent prospect of a Federal Election in early 2019. Its no secret that the Labor party have flagged negative gearing as an area of concern in their platform. As this political football is kicked around over the next few months both lenders and owners will get increasingly nervous about the future in investment property in Australia. This sort of commentary will only continue to undermine an already nervous property sector.
With that in mind there are still pockets doing ok in Sydney. Do your research and remember when buying and selling in the same market, prices differences will realign over the longer term.