Sydney’s median house price has increased by 46.7% to approximately $880,000 since the start of the current upcycle in January 2012 . Despite such a strong performance, the “days of the city’s stellar growth run are numbered,” said the report.
Momentum Wealth’s research paper, entitled Property Market Spotlight: Sydney, examines the city’s key demand and supply indicators, and concluded that conditions are easing amidst a much-publicised looming apartment glut.
“It can be acutely detrimental to buy at the peak of a market upcycle as the ensuing downturn can have a severe setback on investors’ finances and investment goals,” said Damian Collins, managing director at Momentum Wealth. “While it’s impossible to predict how much longer Sydney’s upcycle will continue, our research report highlights an easing in several key market indicators, suggesting the strongest capital growth in the current upcycle has passed.”
Signs of decline are already apparent: properties are now taking longer to sell, the number of properties selling has declined, and dwelling approvals have plateaued at record levels. The market is also suffering from acute affordability issues, which is pricing some buyers out. Moreover, the threat of an oversupply of apartments looms in specific locations. These factors are likely to weigh in on short-to-medium term capital growth prospects.
Collins recommends investors consider other capital cities that are earlier in their growth cycles as these will be more affordable and offer higher yields.