No calamity coming: Why Sydney still has price growth in 2015: John McGrath

Sydney is one of the most resilient property markets in the world, so estate agent John McGrath says buyers and sellers need to ignore the bubble commentary.

"Sydney has proven itself over and over again to be one of the most resilient property markets in the world, with long-term fundamentals that form a bedrock of strength for the market." 

But he says the boom is definitely going to end at some point.

"That doesn’t mean price growth will end, it will continue on but in a less spectacular fashion."

He told the Today Show's Lisa Wilkinson that the Sydney market still had "a few percent to go."

"The Sydney and Melbourne markets are red hot…probably close to where they are going to go in this cycle.

"I think we are close to the top of the market.

"Don't panic, don't over stretch your budget," he advised.

When asked what will take Sydney out of the boom? He listed a few things on his switzer blog.

• The market will at some point reach a natural peak – prices will get too high and buyers will lose interest. This isn’t happening yet, partly because finance is so cheap.
• Investor activity, which has been a major driver of Sydney’s boom, will taper off as yields become too low.
• Interest rates will begin rising at some stage as the economy improves and this will put the brakes on activity – but this is a long way off. 

"It’s a bit unusual to have such a long stretch of significant price rises," he conceeds.

"But it doesn’t mean a calamity awaits us.

"A big part of the growth we’re experiencing today is simply catch-up after several years of little growth. 

"Everyone needs to calm down and remember that this is a solid, high performing property market in a truly international business hub and in my opinion, it is going to stay that way for a long time to come. 

He says a big fundamental is that Sydney is vastly undersupplied with natural borders that limit the amount of new homes that can be built, yet demand keeps on rising due to the city’s strong population growth and increasing engagement from overseas buyers.