Investor demand could spur 10% gain in mid-market Sydney property prices in 2013: APM’s Dr Andrew Wilson

Sydney properties priced between $500,000 and $1.5 million could rise as much as 10% over 2013, says Australian Property Monitors senior economist and Dr Andrew Wilson.

Dr Wilson says low interest rates and increasing buyer confidence are the two key factors that could drive this portion of the market to outperform the prestige market and properties priced below $500,000.

The permabull market observer is sticking with his view that there will be an overall 3% to 5% gain in Sydney property prices in 2013 "though closer to 5 than 3".

Earlier this month, he tipped the property market to pick up a little in 2014 with gains of between 5% and 7% forecast.

“[The $500,000 to $1.5 million price bracket] is going to be the strongest portion of the market," Wilson told Fairfax media.

"There's a lot of activity from investors but very few first home buyers and the prestige market is still relatively flat."

The latest Westpac-Melbourne Institute survey of consumer sentiment, carried out after the May 7 rate cut recorded a carried a sharp 7% fall in the consumer confidence index from 104.9 in April to 97.6, pushing it back into a range where pessimists outnumber optimists for the first time since October 2012.

However, sentiment about the property market is much stronger with the ‘time to buy a dwelling’ sub-index lifting 11.2% in May to be up 20.7% over the past 12 months to 142.7.

Two years ago it was at 110.7.

“Households recognise the significance of the rate cut for housing activity along with evidence that a patchy upswing in dwelling prices is under way,” said Westpac chief economist Bill Evans.

Wilson says the revival of the Australia’s housing markets was confirmed 2012 with leading indicators such as rising auction clearance rates pointing to a market heating up.

Last weekend, Sydney’s auctions clearance rates hit new highs with 78.6% of houses sold at auction, the strongest result since early 2010, according to preliminary APM figures which will be updated tomorrow by APM.

Clearance rates have remained high all year, edging steadily higher again since Easter.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


Be the first one to comment on this article
What would you like to say about this project?