NSWAfter a $100,000 annual gain, "supercharged" Sydney set to lose half its price growth momentum: APM's Andrew WilsonAfter a $100,000 annual gain, "supercharged" Sydney set to lose half its price growth momentum: APM's Andrew Wilson
I am not the only property commentator tipping Sydney's house price growth was likely to slow to around half the pace of last year.
After news today of Sydney house prices rising almost 6% in the last quarter of the year, Australian Property Monitors economist Andrew Wilson says prices just can’t keep growing at that "supercharged" level into the medium term.
The Sydney market will likely record around half the price growth of 2013, he has suggested.
Sydney’s median house price increased by an "exceptional" 15.1% or over $100,000 in 2013 to a record $763,169.
"This was the strongest calendar year growth in house prices recorded since 2003," he said. Unit prices rose by 4.3% over the quarter, up by 10.9% annually.
Earlier this month I suggested the likelihood of growth slowing in Sydney during 2014.
Wilson reckons Melbourne will be lucky to get half the growth it had this year, with most of that with the first half of the year.
Melbourne house prices rose solidly by 3.2% over the December quarter with unit prices up similarly by 3.1%. APM puts Melbourne house prices up 8.6% over the year with units increasing by 6.8%. The Melbourne median house price sits at $568,824, exceeding its previous June 2010 previous peak. The median unit price of $421,759 also reflects a new record.
APM had house prices around the country ending the year on a strong note, with prices in every capital city finishing the December quarter higher than the previous period for the first time since 2009.
The national median house price surged 4% to a record high of $597,556, up 9.8% annually given record low interest rates.
"The national house price growth reflects an extraordinary contribution from Sydney," Wilson said.
But a weaker economic forecast, a lower Australian dollar, combined with rising unemployment and inflation was likely to keep flatten the price growth momentum.
Although end of year buyer momentum in all markets will ensure a positive start to 2014, affordability constraints and waning economic activity will act to moderate prices growth through the year.
He forecasts the Perth market will remain "solid" this year while Brisbane house price growth is set to "accelerate."
"Adelaide, Canberra and Hobart, however, will continue to record modest prices growth over 2014 with most activity again likely to be over the first two quarters of the year."
Wilson also warned the prospect of an oversupplied local investment market in capital cities that had a surge in investor activity last year.
“The current level of price growth in Sydney is unsustainable - particularly given the likely continued deterioration of the local economy and the prospect of a flood of new rental properties overshooting underlying market fundamentals,” said Wilson.
