Sydney has been named one of three cities with the best real estate growth potential in 2020, according to a new industry forecast, raising new concerns about affordable housing.
The Savills World Cities Prime Residential Index released this month uses 27 cities to calculate expected price gains for the coming year. An average price increase of 1.8 percent is forecast for the locations listed this year.
Rise and fall in world market prices
However, the port city saw an increase of 6 to 7.9 percent compared to other regions. Sydney is not alone at the top, and Lisbon in Portugal and Moscow in Russia are also likely to see the same growth. The reason for the impressive real estate increase in the three cities is a combination of low interest rates and increased demand.
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Dubai and Hong Kong, often referred to as the world’s most expensive real estate buying cities, were potentially considered the worst in 2020. The values are likely to fall by 2 to 3.9 percent and 6 to 7.9 percent, respectively. An oversupply hinders the once booming real estate market in Dubai, while the unrest in Hong Kong is affecting prices there.
Local cities back on track
Uncertainty in the markets for premium residential properties in the Asia-Pacific region is expected to continue in 2020, but Sydney is expected to be a step ahead with price growth this year.
According to Paul Craig, CEO of Savills Australia and New Zealand, the Australian residential property market as a whole is returning to an upward trend triggered by lower mortgage rates and unmet demand.
He added that both ABS and CoreLogic had provided data showing improved price growth, driven by Sydney and Melbourne, which in turn affected the other capitals.
“As of August 31, 2019, CoreLogic’s national price change was -5.2 percent (year over year). As of November 30, 2019, the national price change had improved to +0.1 percent. Sydney (-6.9 percent) improved to +1.6 percent and Melbourne -6.2 percent to +2.2 percent from a low average of 40 percent a year ago.
“Australia as a whole is currently seen as a growth market as our recent financial regulations have changed for the better and a new reelected government is emerging that is focused on maintaining a secure economy,” he said.
Luxury again at the top
According to Chris Orr, Director of Residential at Savills Australia, luxury real estate has “definitely returned” in Sydney’s key markets.
“In fact, we are currently seeing record sales values in some areas,” he said.
“Overall, Sydney has recovered from 5 percent to 7 percent in the blue-chip areas. However, there are still some local markets where there is an oversupply of housing that has a negative impact on prices,” he added.