Sydney residential property is primed to move onward and upward, but the high cost of living are holding back a market that’s chomping at the bit.
The NSW capital saw reasonable growth of 6.39% for the past twelve months which sits a few points below the city’s 10 year average 8.03%. It’s a solid figure indicating a consolidating market set for further upside if the economic stars could align according to property advisory firm Braxton Chase.
“For many months now the broader Sydney property market has been like a revving car, trying to take off at high speed and move away from four years of flat and negative growth,” says executive director Andrew Donnelly.
“But the handbrakes of affordability and rising interest rates just aren’t quite ready to ease off yet,” he adds.
Residential property in Sydney has been the primary casualty of ongoing rate rises designed to slow inflationary pressures across the nation.
While many other localities have been enjoying a bull run able to absorb the upswing in borrowing costs, Sydney’s bearish buyers have caused mid-ring stagnation, and western suburb woes. Unfortunately, affordability problems have continued to creep and now reach into areas not traditionally associated with Aussie “strugglers”.
“Tales of people struggling to service large loans have drifted from west and south west towards the more affluent middle tier market,” says Donnelly.
Additional pressure from rentals is pulling the market forward, but impacts in a very direct fashion on the end user of the rental market - the tenant.
“Across the entire metropolitan area, a problem of another kind – the rental crisis – has seen yields continue to grow at an alarming pace. Great news for investors, bad news for renters,” says Donnelly.