I met with a friend from Sydney last week.
He’s a real estate guy too and he was amazed that the Reserve Bank had held interest rates.
His comments would likely resonate with many Sydneysiders who are spruiking the unaffordability of Australia’s real estate capital.
In the same week I spoke to friends in Townsville, Rockhampton and Airlie Beach who were moping up after Debbie blew in to town — It seems that it is adversity season in the far north. Between the market crashing and the water rising it has been a tough couple of years for our hardened brothers and sisters up there.
To round out the week I spent a few days in Darwin. The market up there is facing similar struggles to those in many locations from Perth to Gladstone dealing with the hangover of the resources sonic boom.
With our country moving at such different speeds how can a national body slow the ever growing Sydney market and at the same time reignite confidence in our regional centres.
One developer I spoke with this week likened Sydney to the true intentional cities of London, New York and Paris. Cities where people of extreme wealth will hold properties to demonstrate their success.
I have heard others index the Harbour City against the Shanghai market. However it’s justified that region doesn’t seem to slowing down and many Australians are major benefactors subsequently.
Sure the market will drop, its an inevitability, but will it ever drop back to a level you could call affordable? Would you expect a property in Manhattan to be affordable?
The question is what’s more important, making Sydney affordable or keeping the wheels turning everywhere else?
To make this question even harder the banks don’t seem to follow suit anyway. The cash rate stays solid yet banks move rates. The RBA rate seems to be more of a confidence leader than a rule for banks to follow.
If slowing the Sydney market is the task at hand then maybe it should fall on the shoulders of the state or local governments. To affect the entire country at a time when grass shoots are finally starting to show in some markets or when other markets are the worst they’ve been in a decade is a big call.
Like beauty, affordability is in the eye of the beholder. Australia has some incredibly affordable property, but sometimes it’s not in the location you want to buy in. As the city centres start to stretch and young couples are moving further out there are many examples of cosmopolitan precincts popping up in areas that were previously baron of good coffee, bearded barristers and fresh cuisine.
While rates are low, getting in to the market is easier and once in the benefits of capital growth are shared among the homeowners. Managed wisely these gains can help move property owners back toward the suburbs they initially wanted to buy in, but that’s if they still want to live there.
To read the entire article, please follow the link below