Sydney has bright lights at the end of the tunnel

Sydney has bright lights at the end of the tunnel

As the Sydney real estate markets start drawing the curtains on what has been a highly entertaining 2015 year it’s interesting to note some are framing 2016 as the recession year. However before we start nailing that coffin we need to look at what possibly may cause a recession and then look for what may avert a recession. Naturally there are many that opt for the let’s wait and see option although I’m of the opinion that we won’t see a technical recession.

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Yes in some areas property prices are falling and in many other areas property prices are still performing well. Just last week we set (nearly doubled) the all-time record price for a Cammeray waterfront.  This week a developer released Chatswood Place, a $300 million boutique style development, and in just three hours set a new suburb record as well as securing $160 million in off – the – plan sales. This is the very same investment market which many were believing was well and truly finished.

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Last week the Australian Bureau of Statistics (ABS) revealed that business investment spending in the September quarter had fallen 9.2 per cent. This quarterly result was the worst in the 28 year history of the survey of business investment. The ABS also released the GDP growth which identified growth of 0.9 per cent thanks to the highest exports in 15 years, an increase in consumer spending and of course the much publicised housing boom more particularly in apartment construction.

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SYDNEY AERIAL PHOTOGRAPHY

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We also need to note that Treasury has cut the nation’s potential economic growth rate to 2.75 per cent down from 3.25 per cent. This follows three consecutive years of below – trend economic growth where the elephant in the room is the decline in mining.

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Now for that beaming light at the end of this tunnel of misery – enter the very cashed – up NSW government. Unlike the vast majority of state and territory governments NSW has an overflow of coin and it’s all going into the biggest infrastructure spend in the state’s history. Over the next four years the NSW government has allocated a staggering $70 billion infrastructure spend which is unprecedented. This in itself will singularly underpin the Sydney housing market given nothing stimulates the markets and consumer confidence like a massive infrastructure spend.

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The breakdown is $38 billion to be spent on new transport projects which will also include the second harbour tunnel, North West rail link, South East Light rail, Sydney CBD and WestConnex. The Transgrid lease which brought in a record $10,258 billion is still to be allocated although it has been confirmed that these monies will also be directed into new infrastructure projects.

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Following the federal government crackdown on illegal foreign real estate acquisitions in Australia the Significant and Premium Investor Visas have been running at full – speed. It will be very interesting to see the next set of figures and whether there has been a significant spike in applications since the crackdown. The low Australian dollar is also enticing many offshore purchasers and expats and this is now a very strong emerging market within the Sydney real estate markets.

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So when one takes the time to actually look at what is going on I find myself (as do many others) not too worried about this so called recession. The last recession was 25 years ago and they aren’t very nice but when you have a state government pouring $70 billion into the NSW economy it would appear that NSW has more Zoom than Gloom. To further highlight this the NSW government just appointed Lucy Turnball (the PM’s wife) as chair of the NSW government’s newly created Greater Sydney Commission. The sole purpose of the Greater Sydney Commission is to stop the infighting at local councils and to speed up developments across the city although I still see councils incompetency as an on – going hurdle.  I’m reliably informed that the premier will hand his greater Sydney Commission special powers and the councils will not like what’s in-store.

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Of course not everybody will be convinced but then again, that all adds to the theatre of debate. When the 2016 property markets kick off I’m of the view that the areas within a 15 kilometre radius of the CBD will do very well. But expect more than a few to tell a different tale.

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MOSMAN – 2088

• Number of houses on the market this time last year – 103

• Number of houses on the market last week – 65

• Number of houses on the market this week – 55

• Number of apartments on the market this time last year – 66

• Number of apartments on the market last week – 60

• Number of apartments on the market this week – 51

CREMORNE – 2090

• Number of houses on the market this time last year – 13

• Number of houses on the market last week – 15

• Number of houses on the market this week – 11

• Number of apartments on the market this time last year – 25

• Number of apartments on the market last week – 18

• Number of apartments on the market this week – 17

NEUTRAL BAY – 2089

• Number of houses on the market this time last year – 10

• Number of houses on the market last week – 8

•Number of houses on the market this week – 8

• Number of apartments on the market this time last year– 42

• Number of apartments on the market last week – 33

*Number of apartments on the market this week – 30

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate.

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For this week’s open for inspections

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Source: APM Price Finder

2 Responses to “Sydney has bright lights at the end of the tunnel”

  • Thanks for another interesting commentary on the local property market. You say that “The sole purpose of the Greater Sydney Commission is to stop the infighting at local councils and to speed up developments across the city although I still see councils incompetency as an on – going hurdle. I’m reliably informed that the premier will hand his greater Sydney Commission special powers and the councils will not like what’s in-store”. It would be interesting if you could explore that issue further given that many Mosman residents are concerned that forced council amalgamations will see major changes to local development rules with significant long term implications for the character of suburbs like Mosman.

  • rsimeon says:

    Alan

    My understanding is that Mosman Council will not be forced to merge and North Sydney, Willoughby and Lane Cove councils will be merged. Having said that the council will lose all of its powers on new apartment developments.

    So yes, there will be plenty of high rise along our traffic corridors. I will drop a few clangers this Friday, when I do our last blog for 2015. 🙂

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