John McGrath lowers his 2014 Sydney forecast to 5-8% price growth
Sydney's price growth this year will be between 5% to 8%, estate agent John McGrath forecasts.
"That would give us a collective 20% growth for the first couple of years of this cycle and that’s a significant – yet sustainable, rise in property values," he told the readers of his Switzer blog.
He still expects further price growth in 2014 but says it will inevitably slow.
John McGrath had earlier this year forecast up to 10% growth this year, so the upper range of his forecast has been adjusted slightly downwards.
"In Sydney, I think we will see 5% to 8% growth this year off the back of almost 15% last year," he said this week.
McGrath says the past year in Sydney real estate had been a "really exciting time."
"The market has been in full recovery mode and the hottest I’ve seen it in many years.
"However, people are now starting to talk about it being all over," he recently noted.
"I’ve been doing this for over 30 years and I can tell you recoveries never occur in a straight line.
"We often have a bull run at the start; then after a period of great growth, it eases off.
"Buyers become concerned they’re going to pay too much, others get sick of missing out and take a break.
"Demand comes off the boil and price growth slows. And that’s the key. It slows, it doesn’t stop or go into reverse.
It’s very healthy for markets to take a breather now and then during a new growth cycle.
"That’s how price bubbles are prevented.
"We saw 14.5% growth in 2013. At the start of this year, I was tipping 5 to 10% growth with an inevitable decline in the frenzied activity of 2013. Sydney achieved 4.1% in the first quarter. If we have just 0.5% growth every month for the remaining nine, we’ll end up with 8.6% for the year. That’s good, steady growth."
John McGrath said last year, the strongest segment in Sydney was inner city and beachside markets between $750,000 and $2 million.
"Now, we’re seeing more activity in the higher price brackets and RP Data’s research confirms this trend."
He said that as with most market recoveries in Australia, what happens in Sydney eventually happens everywhere else.
"If Sydney is starting to slow down overall, other markets are probably about to heat up."