Buyers in the suburbs of Sydney’s CBD and west are bidding up property prices as a global economy improves, with the price of properties rising in the past year and a half.
A new report by property agency Teradata shows median prices of houses and apartments in Sydney have increased by more than $1 million since the start of the year, while the median price of apartments has increased by $200,000.
“It’s all about the fundamentals, the fundamentals are very strong,” said Teradata managing director Rob Gilder.
“I think the fundamentals will continue to hold for a while.”
In a report published earlier this month, Teradata said the global economic recovery has made it easier for Sydney and Melbourne to attract buyers and build housing stock.
“Australia is the world’s second-most expensive place to live, after New York, according to a recent report by research firm Euromonitor,” Teradata’s executive director, James O’Brien, said.
“That said, our global data suggests the affordability crisis is starting to ease.”
However, the global housing market has been affected by the financial crisis, with Sydney and Perth seeing a spike in house prices in the last year.
“The housing market in the Sydney CBD has seen a significant increase in demand in the first half of 2017,” Mr O’Brien said.
He said prices in other parts of Sydney and the inner-west of the city have increased over the past few months.
“We’ve seen a very significant jump in the price in the areas of the CBD in the outer suburbs of the City, with a lot of that in the inner West,” he said.
The rise in prices is due to the increase in foreign buyers, he said, adding that foreign buyers tend to buy more expensive properties than locals.
“This is a big driver of the increase,” Mr Gilders said.
Mr O’Brren said foreign buyers are increasingly coming to Sydney to seek the higher end of the market.
“As we continue to see a shift towards luxury and other luxury homes, we are seeing more and more foreign buyers coming into the market,” he told 7.30.
“They are looking for properties that are not only priced higher, but that are a step up in quality, but also a more expensive property.”
Mr Gildery said foreign property buyers have become a key part of the local property market.
He suggested that foreign property owners may be buying properties to boost the quality of their own properties, or to boost their incomes.
“A lot of the [foreign] buyers are looking to take advantage of a better property market, so they can buy a property in the CBD, and in the city of Sydney, for example,” he explained.
“Many of these properties have been developed with foreign investors, so that gives the property a certain cachet and it’s very attractive to buyers.”
He said a strong property market could lead to a stronger economy.
“Foreign investment has been around for a long time, so I think the economic fundamentals have been in good shape for quite some time,” he added.
“What we have seen is an uptick in foreign investment, and a return to growth.”
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