Slight softening possible, but Sydney's housing 'bubble' not set to burst: John McGrath

Slight softening possible, but Sydney's housing 'bubble' not set to burst: John McGrath
Jonathan ChancellorDecember 7, 2020

Estate agent John McGrath has warned against "the wait until prices go down" sentiment that he says is an emerging trend.

"It always happens in the later stages of a boom and it’s understandable – but waiting “til prices go down” is also a big mistake for buyers to make," said McGrath on his Switzer blog.

"While there’s plenty of eager buyers around in Sydney right now, we’re also starting to hear about buyers giving up, with the intention of waiting out the rest of the boom."

After two consecutive years of almost 15% growth in Sydney, the real estate veteran said it was understandable that buyers might assume that rapid growth has to end with a fall - or "the mythical ‘bubble’ they keep reading about has to burst".

"But I am not expecting median prices to drop by any significant amount once this boom is over," wrote McGrath.

"The most you’ll see is a slight softening, reflective of less demand, with small price growth in some months and small losses in others, citywide. 

"I think Sydney house prices have got 5-8% growth in them this year alone, so doesn’t it make more sense to buy now and ride the last wave of capital growth, instead of waiting for the boom to end?" 

McGrath suggests the opportunity cost of delaying a purchase "in the hope (and that’s all it is) that prices go down in the area you’re targeting' would already set you back $30,000,if say you were looking at buying a $1 million house in January but you decided to wait. 

"According to RP Data stats, that property was worth $1,014,000 by January 31 after 1.4% growth over the month.

"By the end of February it was worth $1,030,224 after another 1.6% growth on top of that.

"So waiting two months for prices “to go down” has cost you $30,000 already."

{mijopolls 103}

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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