Sydney predictions by John Edwards (Residex)

I listened to John Edwards (CEO of Residex) last weekend at the Property Expo and thought I'd post a summary of his thoughts for the Sydney market for the benefit of those here who didn't make it:

John's view is that NSW is in crisis with rising rents, affordability issues for home buyers, a national housing shortage and a state govt that doesn't possess the foresight to change things for the better.

He believes that we need some strategic long term thinking to solve this generational problem of affordability, and this includes focussing on regional NSW areas to stimulate activity as Sydney is becoming overloaded. He was talking transport improvements and tax incentives to businesses who may want to set up in regional areas.

Aust-wide statistics that he provided included:

2007- 19,000 dwellings shortage (with 41% of this in NSW alone)
2008- he's predicting a rise to 20,000 and climbing if our current situation remains the same.

Sydney's current median of $537,000 still out of reach for majority of first home buyers.

With an increasing population, his belief is that Sydney still has a supply that is out of balance and this shortage of housing stock will have an impact on both rents and prices in the near future. The current growth statistics suggest that the next growth cycle has already commenced for Sydney and that, by 2009, we should be averaging 7.2% annual cap growth. There is an upwards trend, but it is moderate.

His advice- though he did admit that he may be advocating this a little early (but time will soon tell) is that now may present good buying opportunities in Sydney, prior to his forecast of the next boom. With the stock market showing all the signs that it might now be approaching the end of it's "bull run", it may well be the time to re-evaluate the housing market for quality stock at fair prices.

Yay!

I, of course, liked what I heard... I was there too and the upbeat appraisal of Sydney certainly was music to my ears. With $1.5M in Sydney property already that I'm converting into $3.2M via development, that's a positive outlook to have on the radar. And my holding costs will be about neutral on completion at today's rental assessment. Have those numbers creep up anywhere near where he's projecting and I'll be awash with cash!

Manage the downside and hope for the upside! If its half as good as he paints it then us Sydney-siders are all looking good.

Thanks jacque,
Michael.

I notice that since John predicted great growth for the Parramatta region (13% p/a) there's been increased interest in this area from investors.

I've had three enquiries in the last two weeks about Parra alone- seeing as it's expanding and the council has recently relaxed the building height restrictions for some areas, it seems to be moving ahead. I prefer North Parra myself, and if buying there would avoid the massive highrises near Westfield.