Home prices in Sydney have increased by 10.6 per cent over the last 12 months with a median dwelling price now more than $1.1 million (CoreLogic, March 2024).
Whilst Shane Oliver argues that property in all cities is currently overvalued on the basis of the average 2.7% rental returns, he also acknowledges that house prices are unlikely to correct in the near future (Sydney Morning Herald, March 2024).
So what leads some economists to believe that house prices are unlikely to fall?
- Property price growth is supported by population growth. Last year, demand for housing exceeded supply.
- Rising construction costs have made building new homes more expensive, and existing home prices therefore rise to make buying new homes relatively cost effective.
- Interest rates have most likely peaked and cuts are expected in the second half of the year (Shane Oliver, February 2024). Lower interest rates may favour an increase in property prices.
If these trends continue, slow and steady capital growth of property is anticipated (Financial Review, March 2024).
If you are interested in the current value of your home, I can provide you with a free valuation guide. Please give me a call on (02) 9908 9888 to discuss, or email tricia.williams@edneyryan.com.au.
If you are considering buying a property this year, contact me to get started on the loan pre-approval.