After declaring two weeks ago that Sydney was in the grip of an “unprecedented” boom in Chinese property investment, real estate agent John McGrath returns today to hose it all down:
“There is no bubble. Sydney properties are not overvalued. They are at fair market value and heading up,” Mr McGrath wrote in his annual report released on Monday.
…“The simple fact is that the weight of demand from many of the influential wealthy buyers seeking to secure a part of Sydney is in certain pockets,” he said.
“It’s fair to say that it will get harder for Sydneysiders, young first-home buyers, couples, to own their dream property in their dream suburb, but certainly not impossible.”
…While a gradual lifting of interest rates expected to occur from the second half of 2014 will bring housing market activity closer to long-term averages, John McGrath expects this upward trend in housing market activity will continue largely uninterrupted.
…“Investors are back in force looking [for] secure bricks and mortar assets ahead of the next growth phase, both personally and through their self-managed superannuation funds,” he said.
So! No bubble here, just an unprecedented influx of foreign cash, unprecedented influx of SMSF cash and unprecedented absence of buyers based on fundamental household formation!
Sydney’s supply situation is more supportive to prices than other cities but current price rises are a financial repression rally, pure and simple. The last thing Mr McGrath needs to see is rising interest rates. Such a speculative market will not respond well.
