Sydney, an International City: No Property Bubble Here
Sydney’s property market is famously lucrative. With the median house price now resting at a cool $1.2 million, it’s no wonder that investors from near and far flock to purchase property in our most celebrated city. But, as prices continue to rise, there are always those who’ll ignite doubt in the debate about the sustainability of Sydney’s booming housing market. Is Sydney’s property bubble set to burst? We don’t think so, and here’s why.
The world’s most liveable place
If you’ve had an ear to the ground of property sales in Sydney recently, you’ll know that some suburbs have seen a doubling in housing prices over the last five years. Sydney’s most expensive suburb, Point Piper, saw a staggering 176% increase in housing prices between 2012 and 2017, while the western suburb of Llandilo saw a 164% upward swing. With this kind of record growth, as well as staggeringly low interest rates, it’s little wonder that there is talk about a housing bubble burst in Sydney.
Despite fears around the ‘bubble’, its important to examine the Sydney housing market in the appropriate context. Attracting such a large number of international investors and new residents, and being one of the world’s most desirable business destinations, Sydney is truly and international city. In light of this, the property market should be viewed as such.
Australia, in general, is a desirable place to live. Our capital cities regularly appear on the ‘most liveable cities’ lists. In fact, all five of Australia’s major cities ranked in the top 20 most liveable cities, according to the Economist Intelligence Unit’s global survey, with Sydney ranked at 11th – and it’s no wonder. With larger than average homes (when compared globally), pristine beaches, a peaceful political climate, and the country’s abundance of natural beauty, it’s no wonder that so many international citizens flock to the land down under to make a life. According to 2016 census data, over 6.1 million Australians were born overseas, with more than 18% having arrived in the last five years. Sydney, in particular, is a popular choice thanks to its metropolitan lifestyle options and booming business precincts.
Housing prices within Sydney must be surveyed on a global scale, if we’re to have a true understanding of the market trends and the city’s potential for continued growth.
Sydney: An international city for an affordable price
Some of the world’s other booming migration hotspots and real-estate goldmines like Singapore, London and Hong Kong boast hefty prices which make them unaffordable for most. When comparing price per square meter for housing, it’s easy to see what makes Sydney so attractive:
- Hong Kong: $33,800/sqm
- Singapore: $24,100/sqm
- London: $21,000/sqm
- New York: $17,000/sqm
- Sydney: $13,300/sqm
Regular news reports about Sydney’s expensive housing would have Australians believe that only wealthy foreign investors can afford to purchase property there. Less-expensive cities around the country might be more attainable for many first home buyers; however, when you consider the comparable living conditions of Sydney versus each of the other international cities listed in the figures above – and when considering Sydney on a global, and not national scale - Sydney’s property prices are astonishingly affordable.
The other affordability option to consider, of course, is the cost of living. Not only are Sydney prices competitive when it comes to price per square metre, the city is also incredibly affordable when it comes to cost of living, on a global scale. Sydney is more affordable, according to The Economist, than:
- Honk Kong
- New York
- Los Angeles
- Tel Aviv
You can read more about cost of living comparisons around the world here.
A sound investment
For years now, Australia’s growing population and lack of housing has driven housing prices up. Needless to say, our population continues to increase, and in no small part, this is due to consistently rising migration. Housing developments are yet to keep up with demand, and this makes investment in Sydney real estate a sound strategy for growing wealth.
Furthermore, Australia’s residential real estate is worth a whopping $7.4 trillion, with outstanding mortgage debt of just $1.70 trillion. With household debt for mortgages sitting at just over 20% of total value, the Australian real estate market is one of the safest in the world.
So, if you’re considering investing in real estate, but have been holding your breath for the Sydney property bubble to burst: don’t. Sydney’s property market has a strong record of continued growth, and in light of its position as a truly global city, it is more affordable than most. If you’d like to know more about investing in property in Sydney, get in touch with Porters House today, and have the industry experts on your side.