RP Data – Rismark Home Value Index reports that Sydney’s home values increased by 6.6 percent over the first seven months of 2009. House values rose by 7.2 percent over this period compared with unit values rising 5.4 percent. Gross rental yields in Sydney are outperforming the national average with houses returning 4.5 percent (national 4.4 percent) and units returning 5.6 percent (national 5.2 percent).

Earlier this year the Sydney property market came back to life when the surge of first home buyers ignited the lower end of the market. The Government increasing the first home buyer’s grants to between $14,000 and $28,000 had the desired stimulus effect with buyers rushing out to secure their dream homes. The Australian Bureau of Statistics show that the number of loans to first home buyers increased by 58.8 per cent from October 2008 to July 2009.

With positive news of an economic recovery, property investors also made a come back to the Sydney property market with the June quarter showing a 24 per cent increase in investor loans from the previous quarter.

In July, one frustrated property buyer told me that they were queuing to inspect a house located in the inner Sydney suburb of Newtown. When they finally reached the front door, the selling agent told them that they had to limit their viewing time to 5 minutes so that all the other property buyers could get through before the end of the inspection time. The frustrated property buyer went on to tell me that once they were inside the house, they could hardly move because of the number of property buyers in there.

With interest rates still at 50 year lows and the Australian economy moving forward once again, the Sydney property market now comprises first home buyers, home upgraders looking to purchase in the next price bracket and also property investors who have renewed confidence in the market. Generally, properties up to the $2m mark have been selling well across the Sydney property market since about July 2009.

So what are property buyers experiencing right now in the Sydney property market?

Although the governments first home buyers grant will be revert back to $7,000 from 1 January 2010, there is already momentum in the Sydney property market. Real estate agents are reporting that demand is high and housing stock levels are low and this is causing competition for housing.  RP data reports that auction clearance rates have risen from 48.5 per cent in February to the 73.1 per cent as at October 18.

BIS shrapnel report that by June 2012, NSW will have a housing deficiency of 112,000 dwellings.

Interest rates will have to climb from the current historic lows and the number of first home buyers will revert back to more normal levels however, BIS shrapnel project that the Sydney property market will continue to rise through to 2012. So for anyone sitting on the fence right now, you may risk missing the boat!

Your Name Email Address Comment Image Validation Text