Survey says Sydney and Melbourne property prices will grow for another six to 12 months

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Representatives of some of Australia’s biggest financial institutions and property firms still have a positive outlook for real estate markets in Sydney and Melbourne for the short term at least.

According to the results of the latest Australian Property Institute (API) Property Directions Survey, the majority of respondents believe the upswing in residential property prices has between 6 – 12 months to run in each city.

According to the survey results, 44% of respondents believe Sydney’s price boom has six months to run, while 33% believe it still has a year’s-worth of upward movement.

In Melbourne, 50% of respondents believe the Victorian capital will see prices rise for another six months, while 33% believe it will more likely be another 12 months of increases.

In terms of sustainability, Brisbane’s real estate is looked on as being the safer market, with the majority of respondents believing it is much less likely to form a bubble compared to either Sydney or Melbourne.

“For Brisbane, 70% of respondents indicate that residential property is not in a bubble, 24% indicate that it is in or is entering a bubble and 6% are unsure,” API NSW president George Vallas said.

“Results were split for Sydney, with 50% of respondents indicating residential property is in or is entering a bubble, while 50% indicate it is not in a bubble,” Vallas said.

“For Melbourne, 56% of respondents believe residential property is in or is entering a bubble, while 44% believe it is not in a bubble,” he said.

Respondents were also asked what they believed where the main drivers of residential capital growth levels for Sydney, Melbourne, Brisbane and Perth, with interest rates a common denominator across the four cities.

For Sydney, Melbourne and Brisbane 100% of respondents believed interest rates were either a significant or very significant driver of property prices, while 88% of respondents said the same thing for Perth.

Sixty-five per cent of respondents believe interest rates will remain at similar levels for the next year, while 80% believe they will be higher in three-years’ time.

Foreign investors are also looked upon as a major growth driver for Melbourne and Sydney, with 100% and 88% of respondents respectively believing they are having a significant or very significant impact on prices in the two markets.

The majority of respondents (80%) believe foreign investment levels will stay at similar levels for the next year, with only 35% believing they will be lower in three-years’ time.

Negative gearing is considered a major growth driver, with more than 50% of respondents believing it has a significant or very significant impact on prices in all four markets.

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