Sydney's 2004 residential property market will be a renter's delight!
While regional implications will be mixed, increased activity will be driven by decreasing supply and increasing demand in Sydney’s north and east, and lively development in the Central Coast, inner west and western suburbs.
The energy in the rental market will see residential vacancy rates drop to around three% by October 2004. This follows the gradual decline of vacancy rates from a high of 4.5% in December 2002 to the present 3.4%.
Meanwhile, interest rates will again be on the agenda for investors; however the recent increase is unlikely to have a significant impact on the buyers’ market.
For interest rates to really put the brakes on the market they would have to increase to around eight%. Anything less will clear the way for the more serious buyers such as families and first homebuyers and create a more normal balance between demand and property prices.
While interest rates of less than eight% are unlikely to cause a deterioration of investment or prices in most areas, Ms Pilkington warns that apartment prices in some areas may decline, particularly in the CBD and city fringe.
NSW Real Estate Institute figures in September indicated a decline in median apartment prices in Sydney for the first time in five years.
We’ve already seen a decline in prices in the city as investors who have used deposit bonds to buy apartments off the plan have tried to offload before settlement.
The supply of apartments in the city keeps on rising, while the greatest demand for property is in the north and inner west. This imbalance will permeate into 2004 and cause further decline in prices,” she said.
Interest rates are predicted to increase by as much as 100 base points in 2004, so while we won’t see the same fervent activity we did in 2003, there certainly won’t be a real estate bust.
There will still be excellent opportunities for people wanting to buy property throughout Sydney.
*Leanne Pilkington is the general manager of leading real estate firm Laing+Simmons.
