Sydney’s property market is “slightly hotter” than it was three years back, according to a property analyst who says Sydney’s housing market is in a bubble.
James Foxcroft, chief economist at Capital Economics, says the market is at its highest level in three years, driven by the surge in construction of houses in the Sydney CBD.
“In the past three years the property market has become hotter than it has been for a number of years,” Mr Foxcroft said.
Mr Foxcroft’s analysis also suggests Sydney’s median home price has risen by almost 20 per cent to $2.5 million.
Property analyst James Foxcroft says Sydney has been a hotbed of construction since the mid-2000s.
Photo: Michael Clayton-Jones “That’s not just a trend in the city, but in the country as well,” he said.
Mr Foxcube said Sydney’s growth was driven by people moving to the CBD, a trend that has continued since the start of the year.
The city has seen a surge in house prices over the past five years.
In 2017, the median house price in Sydney was $1.9 million.
The average price of a house in the CBD has risen to $1 million, and is now the highest in the world.
A property analyst for a company called Capital Economics says Sydney is at the top of a bubble in its housing market.
Photo by Simon Black/AAP “That trend is continuing,” Mr FOXCROFT said.
“If we look at the past decade, the increase in house price over that time period has been far greater than any other metropolitan region in Australia.
This is not something that will change anytime soon.”
Mr FOXCRoFT says Sydney was at the bottom of the global housing bubble in the early 2000s, but is now at the very top of the housing bubble, which has resulted in “huge rents”.
“It’s still going on and there is no sign of a return to that position,” he added.
While he’s not concerned about Sydney’s rental market, Mr Fox said he was concerned about the rising costs of property in Sydney.
He said if Sydney’s average rent increased by 25 per cent, it would cost the average household $10,500 more a year than it does now.
“That’s a big number for most people and the problem is they don’t have any options,” Mr CBS said.
“So the housing market has to become much more sustainable and that is not a problem for me.”
Property and home affordability woes for Sydney’s inner-city are ‘totally out of control’Read moreMr Fox said Sydney needed to “get the house out of the ground” if it was to have any chance of recovery.
“If you want to rebuild your city, you need to do it in your own backyard, where you can build the house, and not in your neighbours’ backyard,” he explained.
However, Mr FOX CROFT also pointed out there were areas in Sydney where the market had been “unstable”.
“It is very much the case that the city has been experiencing an unprecedented surge in home prices,” he wrote.
It has been the “unprecedented boom” in the housing industry, which began in 2004 and has been driven by “large-scale, highly speculative development”.
In the Sydney suburbs, a property is worth more than the median household income of $45,000, which means that “the vast majority of Sydney’s residents are living in debt”, Mr Fox explained.
“And it’s completely out of whack with the average Sydney household,” he continued.
But Mr Fox’s analysis was based on data from April to December 2016, which did not include developments such as the $3.4 million development on the Riverbank.
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