According to SQM Research, despite a crisis of nearly two years, the price of houses in Sydney remains overvalued.
Many signs suggest that the market was at an all time low and that a surge in prices was imminent. The city is forecast to see a 2% increase in housing prices in September and a further 4% increase over the December quarter.
If we take into account the lower prices at the beginning of the year, these increases would leave prices on average 1% higher than those of last year.
However, the market remained overvalued by 21% in relation to the size of the economy, according to SQM's research director, Louis Christopher,
.
"All this is based on our opinion that there is a relationship between nominal GDP and real estate prices. Logically, there should be a relationship. Rising housing prices can not exceed revenue growth forever. And the bigger the gap between the two, the more housing prices need to be supported by cheaper and easier access to credit, "Christopher said.
The overvalued market would pose problems for policymakers if prices were to rise again quickly.
"If nothing is done, we could soon move to another historical overvaluation point similar to the levels recorded in 2003 and 2017," Christopher said.
At the price surge in 2017, regulators imposed credit restrictions to reduce stocks, avoiding a stock market crash. However, regulators may not take the same steps in the future if unemployment increases or if the economy shows other signs of weakness.
"They could very well let the market work," said Christopher.
Top suburbs:
trott park
,
rooted hill
,
new farm
,
sunshine
,
coolbellup
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