When my clients ask about the potential for a substantial drop in prices for residential real estate in Sydney, I’ve often referred to the consistent message from the major banks’ economists and others. That is that supply and demand are pretty much in balance in all capital cities except Sydney, where we have a gross under-supply that is likely to persist well into next year.
I now have reasons to question this position. Bank economists are very unlikely to ‘talk down’ the market, because 60% of their balance sheets are bricks and mortar. And, in my previous post, I included graphs provided by Stockland, who also have vested interest in the rising market. The other reason is that property monitoring experts are projecting a glut of units due to the many high-rise developments now under construction. They do, however, also project a continuing under-supply in standalone housing.
P.S. I noticed that the 5-year swap rate increased by a much wider margin than in the past. On Friday, the 30th, it was 1.87%, and on Friday, the 7th, it was 2.01%. Could this be a turning point?