Sydney at possible risk of a housing bubble
Sydney’s property prices are considered “overvalued” after increasing by 30% since 2012, and they are now in danger of falling, according to a global property index by UBS Wealth Management.
The international bank has ranked Sydney behind London and Hong Kong as a global financial centre at high risk of experiencing a housing bubble.
The report highlighted a recent similar slowdown in China as a sign of things to come, as recent price increases in Sydney have been influenced by strong Asian demand.
Increasingly worsening economic conditions on a local level and more stringent regulations in the lending market could also raise the risk of a “significant correction” sometime along the medium term, UBS noted.
By placing third on the report, Sydney’s property prices were considered even more overvalued than those of Singapore, Vancouver, and San Francisco; cities whose volatile housing markets have worried overseas commentators for the past few years.
Notably, Sydney’s score on the report was also higher than New York’s—a city infamous for its costly properties.
Local analysts advised that reports like UBS’ should be taken with a grain of salt.
Overseas commentators have been predicting a housing bubble to occur in Sydney for years, but they have yet to be proven, said BIS Shrapnel managing director Rob Mellor.
Mellow remarked that affordability will be a main issue for properties in Sydney, but a correction in values is highly unlikely to happen since there is a shortage of housing. He believes the city’s housing market will be undersupplied for years to come.
Trackback from your site.