The latest property market statistics reveal that there is general slowing in most markets, with some markets having plateaued. However, the Sydney market is beginning to defy logic as the figures are showing evidence of a resurgence of stronger growth.
Sydney houses now have a median value of $839,500, which requires more than half (52.96%) of the after-tax median household income to meet home loan repayments*. In the past, this high level of commitment has caused the market to correct.
Table 1 – July Property Market Statistics
As Sydney houses continue to become more and more unaffordable, the more affordable unit market has been recently recording a higher level of growth as a consequence. In the year to July, Sydney houses grew in value by a staggering 18% (the highest in the nation). This compares to 14% growth in the unit market. However, the unit market has started to outperform the house market in recent months. Sydney units recorded 3.81% growth in the last quarter and by 2.35% in the month of July. By comparison, the Sydney house market grew at lower rates of 2.19% and 1.71% last quarter and last month respectively.
Graph 1 provides the growth trend for Sydney’s market segments.
Graph 1 – Sydney Trend
To avoid problems in the future, the Sydney unit market needs to slow a little. With any luck, the strong growth in July will not continue in August. While growth in asset prices is good for existing home owners, the continuation of growth at this pace could potentially cause future adjustments.
While the Sydney market continues to be the leader in capital growth, there have been exceptional stand growth performers at a suburb level in each major market. The below tables provide the top two capital growth performers in the last year for each major market.
Table 2 – Top Growth Performers, Houses
Table 3 – Top Growth Performers, Units
*Affordability has been calculated based on the following:
Median Household Income $107,021
Assumed Home Load Rate 5.10%
Assumed Tax Rate 17%
Loan Amount 80%
Source: RESIDEX - John Edwards