SYDNEY property prices would move from staggering to “ridiculous” by the middle of the century if they keep growing at their pace of the past 25 years.
The median price of a house would be $6.35 million by 2043, new projections show, up from $1.03 million today, while a typical unit would cost $3.47 million, up from $753,300.
The Aussie Home Loans and CoreLogic report assumed house prices continued to grow at 7.6 per cent a year, the average rate of increase since 1993, and unit prices repeated annual growth of 6.3 per cent.
If that growth held, Sydney’s cheapest suburb in 2043 would be Wilmot – with a median house price of $3.15 million – and the most expensive would be Bellevue Hill, with a median of $34.8 million.
Prices for Sydney’s best homes would be even higher. “Rona” – now the city’s priciest house for sale with an estimated value of $65 million – would be worth about $400 million in 2043.
Even if house prices grew at half the rate of the past 25 years, the estate on Bellevue Hill’s exclusive Ginahgulla St, would still be worth roughly $165 million.
Aussie Home Loans general manager Richards Burns said future prices may beggar belief but today’s prices would have elicited the same response in 1993 when the typical NSW house cost $94,700.
“If you told someone 25 years ago how much we’d be paying for property today they also would have found it hard to believe,”
Mr Burns said.
Aussie CEO James Symond said Sydney prices would grow over the long-term, despite a recent softening in values, due to high migration and population growth.
But he cautioned that affordability was a growing issue for Sydneysiders.
The typical household is spending 49.3 per cent of their income to service an 80 per cent loan on their property – significantly higher than the 36.4 per cent of income they were spending back in 2001.
The average Sydney buyer today is also dedicating 185 per cent of their annual gross income to raising a 20 per cent deposit, up from 116.8 per cent of annual income in 2001.
BIS Oxford Economics analyst Angie Zigomanis said it would be surprising if Sydney’s median reached $6.3 million by 2043.
“Prices would be ridiculous,” he said. “For that to happen, we have to have another 25 years of uninterrupted economic growth with no recession. It’s hard to know if that would actually happen.”
A far more likely scenario would be if prices rose at the same pace as inflation or wages growth. Even so, Mr Zigomanis said Sydney home prices would still be “very expensive”.
The Agency director Ben Collier, who is selling “Rona” in conjunction with Laing and Simmons agent Bart Doff, said one reason for soaring prices was homeowners’ willingness to invest more into their homes.
“Twenty years ago you’d be amazed if someone had invested $300,000 into a renovation,” Mr Collier said. “Now many are spending $8 million, or in the case of Rona, the owner spent $17 million rebuilding the inside of the home.”
Georgia Lunn said she felt “honoured’ to view Rona. “It’s one of the best homes I’ve ever seen,” she said. “The location is just beautiful and for such a grand estate it still has a homely feel. It takes your breath away.”
PRICIEST SUBURBS IN 2043
(by median house price)
Bellevue Hill $34.8m, Vaucluse $28.4m, Longueville $26.7m, Dover Heights $25m, Bronte $23.6m
CHEAPEST SUBURBS IN 2043
Willmot $3.15m, Tregear $3.2m, Lethbridge Park $3.26m, Shalvey $3.28m, Whalan $3.33m
Daily Telegraph /June 9, 2018