At what level will the Sydney median house price peak, and when?

Now that the $1 million Sydney median house price has been exceeded by mid-2015, the next question is when will Sydney peak, and at what level?

I estimate a peak somewhere around $1.2 million will be achieved in 2017.

After that, I expect a nominal fall of about 10% over a couple of years, followed by several years of stagnation, for a real decline from peak of 20-30%.

What do others think? Please nominate a peak value and a peak year for Sydney houses, and also your expectation for the inevitable correction period.

 

2017, under these conditions : one more interest rate cut and no more apra limitations implemented.

 

... or maybe at the start of next winter... how much higher? I can't afford to buy in Sydney already as is, so that is up to much wealthier than me to speculate

 

I think it will play out exactly as it did last time. As you said, a minor drop then stagnation. I think the cycle time will also be the same. Between 2003 and 2013 we had the benefit of a resource boom that we no longer have, which would favor a longer period of stagnation (15 years instead of 10?) but I argue the continual rise of Asia will keep the cycle pretty tight and we'll see another boom in 10 years, so around 2026-2027. They're calling this the Asian century and Australia's proximity to Asia I think means we stand to benefit the most, both through economic consumption, and migration + the foreign investment that follows.

Any dip in Asia (China melting) would be a blip on the long term radar and add no more than another 5 years to that time frame.

 

Peak value: $1.15M-$1.2M
Peak year: 2017
Correction: 2018 to $1.1M*

Then flat (around inflation) for quite a number of years.

* Nothing too substantial except areas with apartment oversupply e.g. South of CBD: Mascot, Wolli Creek, Waterloo, Green Square etc and some stuff out west/norwest that is already ridiculously overpriced–there will be pain in these pockets.

If median overshoots $1.15M by much, I imagine most of that growth will be shaved off when things settle down.

 

Peak in % growth: 2015
Peak in value: 2017

Then flat for a couple of years. Followed by a major recession 2019-2021 where prices may be hammered**.


**See my sig

 

2015: 20%+ growth
2016: ~10-15% growth
2017: 5-10% growth
2018: 0-5% growth
2019: repeat...

I voted peak beyond 2018. Its a run up now but will taper then flatline to inflation.

Cheers,
Michael

Ps What Oscar said. I should have the same sig...

 

If you are specifically referring to just sydney I believe we will see the peak as of end of this year and continue flat for 2 to 3 more years maybe with a max 1% increase.

Correct will not happen after Melbourn and Brisbane and as Steve Ryan said the areas where there are lots of units and northwest suburbs will have obvious correction, after the correction it will stay flat for another 10 years or unless there are significant economic factors that will make Australia once again the golden child for the global wealthy players.

 

Always appreciate your insights Shadow.

Interested to hear your views on other markets in Australia if you have any...

 

Thanks Shadow, I think you may be pretty much spot on.
Certainly very interesting times and certainly more growth

MTR

 

That like is for being HOMELESS, very clever

 

@Steven Ryan: How can Northwest suburbs be corrected in the "correction times" ?
if people already bought the unit and stay as owner occupier, then it doesn't really affect the price of the property in the suburbs right except the suburbs that is motly investor owned ?

@sumterrence: Do you mean SYdney correction phase won't be starting unless Melbourne and Brisbane Correcting first (decrease in value) ?

 

Has APRA put forward 1-2 year for most voters?

 

Is it turning already
http://news.domain.com.au/domain/re...orth-1-million-in-sydney-20150727-gikesc.html

 

@The_good_life : yes it is stasrting to decline, hopefully the price going to be affordable for some first home & Owner Occupier.

 

Prices people are paying (whether investor or owner-occupier) in some areas that will be impacted by the northwest rail link are out of whack–well above their intrinsic value. It's likely they're going to overshoot the mark and prices will come back a bit.

 

@Steven Ryan: yes, you could be right.
I was offered a H&L package (ranging from $700k - $1m) by many of my friends who work as R/E agents for H&L package in:

Schfields, Marsden Park, Riverstone & Ropes Crossings​

They all said that the price is justifiable due to the amount of investment that the government has put into the area.

Anyhow... I'd say, the price will hit the Investor owned property but bot for the owner occupiers.
is that make sense or am I being delusional here ?

Therefore the conslusion here is:

Owner occupier property: will stay kept for longer term thus not affected.
Investor owned property: will be negatively geared even further due to the rent increase not coping with the debt repayment, therefore only couple or few proeprty will be put on distress or market sale (Bank Possessed Mortgagee type of auction)​

anyone can caorrect me or share your expalantion if I'm wrong here.

 

I think your reasoning is a little off.

I'll try to summarise:

• There are a zillion of the exact same cookie-cutter homes in those master planned communities around Schofields, Colebee, Marsden Park etc. Like, thousands of them. Whether owner occupiers or investors are buying them is not the issue (though almost exclusively, it's owner occupiers). There is no scarcity and plenty of supply to cater to demand.
• With the market having grown strongly in the proceeding years, buyers entering now are paying pretty ridiculous premium (for brand new/"gated community") at close to the top of the market.
• $750k-$1mil will buy you a house/semi within 10-15km of the CBD. It is a bit crazy for people to be paying that much 40-50km out, even if they have a bit of a yard and a shiny new home.

In the LONG term those areas will lift in value for sure–big populations increases will occur. That's why IKEA, Bunnings, Costco etc have set up shop there–they research well but these giants look decades ahead. In the short-to-medium-term, prospects of growth out there are not amazing due to the tsunami or new H&L packages available. There's plenty more to come, too.

Buying in the early H&L releases 2 years ago would have worked out pretty nicely though.

 

@Steven Ryan: Ah Yes, now I know more about the effect of new H&L package. Many thanks for the suggestion mate, I appreciate your assistance.

 

In 2017 Sydney will hit Peak Soil!!