The chief executive officers of two major real estate agencies have hit out at the ongoing speculation around conditions of the Sydney property market.
Grant Harrod from LJ Hooker and John McGrath from McGrath Estate Agents both believe the continued talk about a residential property bubble is far from the mark.
Harrod estimates there is a shortfall of 100,000 dwellings in Sydney and the undersupply of stock has led to prices increasing, but the LJ Hooker boss doesn’t envisage a massive price correction anytime soon.
“In Sydney we may see prices temper and soften, but I can’t see a 20-30% collapse,” Harrod said.
“The problem is structural not speculative, even if you had 50,000 new homes hit the market it wouldn’t solve the issues and this isn’t actually going to happen because the process takes a long time.”
McGrath believes the talk of a bubble existing in Sydney is nothing more than familiar talking points being revisited.
“I don’t subscribe to the Sydney property bubble speculation that I have heard over and over for the last 32 years,” he said.
“Every time there is market uplift the same talk happens. People like real estate in Australia, money is cheap and the economy is improving, I’m not concerned about a bubble.”
McGrath also agrees with Harrod that any price correction in Sydney would be on the modest side, predicting any correction would be between 4%- 5%.
Domain Group senior economist Dr Andrew Wilson agrees with the two agency heads, describing the suggestion of a bubble as “doomsday” talk.
“I do not believe in the bubble, it is part of the doomsday mantra,” he said.
“There is no clear historical case or historical drivers to support this in the capital city markets. We have had the doomsday predictions for 10 years and none of them are correct.”
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