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Sydney Is Out Of The Bubble Risk

03 Oct 2018

UBS last week released this year’s Global Real Estate Bubble Index showing that Sydney’s home market is now highly overvalued rather than a “bubble risk,” as reported by Business Insider Australia.

In 2015, the housing market of New South Wales’ capital hit the “bubble risk” territory, which implied a risk of damaging price rise. This was driven by high foreign demand, low-interest rates, and overwhelming expectations.

This year, though, Sydney’s ranking in terms of bubble risk declined to 11th place. The report noted that the risk peaked last year but has since corrected by 5% in real terms, thanks to stricter mortgage lending.

While Sydney is the most expensive city in Australia, it is also clearly the most valuable and will continue to experience a chronic shortage of homes,” explains Metropole Property Strategists CEO Michael Yardney.

Strong economic growth and jobs creation is leading to population growth, and ongoing demand for property in Sydney is well ahead of supply. The rental market is tightening.

While the top end of the market is suffering from a lack of buyers for prestige homes, and the lower-end markets, like Sydney’s South West or the Central Coast, are being held back by affordability issues, some of the inner- and middle-ring suburbs are strongly outperforming the averages.

 
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