Boom or bubble?

Earlier in the year I saw the property writer Terry Ryder speak at a training conference and he openly declared to the audience that house prices were about to rise, I have to admit I didn’t believe him. Ryder spoke of a rise in residential rents and sales activity, an increase in investment loan applications and a general improvement in sentiment and so on….it turns out he was 100% right.

There is no doubt that the freight train that is the Sydney property market has been on the move this year and prices in many areas have sky rocketed. I have been selling property for over 15 years and the current climate reminds me of mid 2003 when the market was on fire (late 2003 was very different).

High auction clearance rates, packed open houses and lightning fast sales are all hallmarks of a white hot property market…hang on…I’m a bit confused?

On one hand we read that the Australian economy is in a precarious position and on the other property prices are soaring?! China is slowing down meaning the faster part of our 2 speed economy is in danger. Shouldn’t this mean we should all be a little cautious?

The bulls say that there is a shortage of property and new housing and as a result prices will continue to rise. The bears on the other hand point to housing affordability in comparison to global markets and point out how far prices could fall here.

One thing is certain, predicting what will happen in the future is impossible but in my humble opinion I think we should all be a little bit careful. Low interest rates are tempting buyers into the market but my guess is that they won’t be at record lows forever. I’m certainly no economist but if the job market is softening, China is slowing and rates have never been lower you should have a good think before you sign on the dotted line.

There is never a bad time to buy a family home that you can afford but affording it means factoring in that things will change, that’s one prediction that I am happy to make.

David Murphy owns an independent real estate agency in Sydney’s lower north shore – feel free to call ON 02 9968 2088 or email with questions david@davidmurphy.com.au