Whilst Melbourne prices are expected to be flat in the coming year, according to BIS Shrapnel, prices in Sydney will continue to increase, such that: 1) by 2006, the median property value in Sydney will be $578,000; 2) by 2006, the disparity in median values between Melbourne and Sydney will increase to $196,000, from its current $115,000; 3) in 2006, BIS Shrapnel is predicting a Syndey metro median price of $578,000, vs $382,000 for Melbourne; 4) in 2007, BIS Shrapnel is predicting that median property prices in Sydney will fall by 10%; 5) irrespective of all this, it is Sydney that is fast becoming an impossible city in which ordinary Australian wage earners can buy a property without the $1/2m mortgage price tag; and 6) in the coming years, the relative value benefit of Sydney over Melbourne, or Brisbane, for that matter, will start to fade away.
Sydney, not Melbourne, is fast becoming the London, or New York, of Australia - potentially a good place to work, an icon to the financial sector, but nonetheless, a city where most people cannot afford to live, except by way of renting (or where people cannot afford to move away from their existing homes).
Maybe I am misunderstanding but aren't points 2 and 6 contradictory?
Am I looking at it from the wrong perspective, perhaps? My perspective is as a RE investor and the dollar figures quoted make me believe that Sydney is a better investment than Melbourne.
Does perhaps point 6, where it refers to "relative benefit" imply something other than investment return? If so, then it would probably be at odds with the comment about Sydney becoming the "London, New York ....".
Regardless, for all the commentary on both sides of the story, I am happy to be a long term (buy and hold) investor in Real Estate. I am not a spring chicken and RE has always, without fail been good to me over a long period of investing in RE.
Yes a lot of people will be hurt even by a relatively small move down in prices, coupled with any increase in vacancy rates or lowering of rental returns. However, this is generally due to overgearing (read greed).
