The end is nigh for Sydney's property boom: Terry Ryder

The end is nigh for Sydney's property boom: Terry Ryder
The end is nigh for Sydney's property boom: Terry Ryder

Sydney home owners can feel confident that their property values will hold up amid the gradual wind-down of the price boom.

There are two reasons. One is that economists are predicting values will fall. Given their track record of getting it wrong on real estate, we can be fairly sure values won’t decline.

The other reason is the historic precedent. Sydney has had big price booms before and when the bull run ended, there was no decline in values. Prices simply stopped growing.

I fully agree with the growing list of pundits calling the end to Sydney’s boom. I’ve been writing about it for the past 5-6 months.

On 21 May I wrote in this column: “It was inevitable that Sydney would run out of puff eventually and the most likely time for it to happen was in the third year of price growth – which means some time this year. It’s rare for major markets to sustain a boom for any longer than that. 

“I’ve just finished the research for the latest edition of The Price Predictor Index, examining market activity in suburbs and towns across the nation, and it indicates Sydney has begun a gradual fade.”

That view was subsequently confirmed by sales figures for the June Quarter, which continued the pattern seen in the March Quarter figures. It’s clear now that, in terms of sales activity, Sydney peaked in the December Quarter last year and has been on a gradual fade ever since.

But does this mean prices will collapse? Not if 2004 is any guide.

The preceding 2-3 years represent the last time Australia had a genuine national property boom. In 2002, six of the eight capital cities recorded double-digit growth in median house prices, including three (Sydney, Brisbane and Adelaide) where prices grew more than 20%. The national average rise was 18%, double the average rise in the past 12 months.

The following year was even more prolific. In 2003, all eight capital cities recorded growth of at least 13%. Five of capital cities grew more than 20% and the city average that year was a 19% rise.

The past 12 months, in comparison to those stellar years, have been rather tame, with only Sydney recording double-digit growth (although some research sources have Melbourne nudging above 10%). Media hysteria suggesting we have been in the midst of an unprecedented national boom lately is quite ludicrous when we consider the 2002-2003 scenario.

 The bottom line, however, is this: by 2004 the boom had run out of steam. Economists, journalists and other pontificators were routinely predicting a collapse in prices. But it didn’t happen. The growth subsided but there was no price decline.

Earlier this year I conducted a research exercise for a client, examining media coverage of real estate since the beginning of the 21st Century and comparing it to actual outcomes.

This revealed that reports of bubbles, unsustainably high property values and inevitable price collapse have occurred constantly in Australian media over the past 15 years.

Every economist complaining that property prices should fall because they don’t comply with their theory about where prices should be has been given airplay.

Every overseas spruiker seeking to drum up attention for a book launch or a seminar tour has gained massive publicity by forecasting that our property values were about to decline 40%, 50% or 60%. One was silly enough to predict a 90% drop in land values and media was silly enough to publish it.

None of them was right. Despite that relentless production line of doomsday headlines stretching across 15 years, there has been no Armageddon in Australian real estate.

So, now the chattering economists are at it again. No matter how many times they get it wrong on real estate, they will continue to step up for another bout of false profiteering. 

The boffins at Macquarie Bank have rolled out some very specific forecasts about something they call “Australian property prices”. They’re going to start falling in March next year. And the decline won’t be 5% or 6% or somewhere in the band from 5-10%, it will be exactly and precisely 7.5%.

Will they be proven accurate? Not a chance.

Terry Ryder is the founder of You can email him or follow him on Twitter.

Terry Ryder

Terry Ryder

Terry Ryder is the founder of

Price Boom Housing Bubble


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