In a city that has seen its share of housing price increases, the rebound of the property market in Sydney is unlikely to last long.
Photo: APThe latest figures from the Australian Bureau of Statistics show that Sydney has seen a total of 2.7 million new housing starts over the past 12 months, the most in a decade.
That has left the market with more than 20 per cent fewer homes to sell.
It is an improvement on the pace of house sales that were up by a total 13 per cent last year and the most since at least 2010.
But Sydney is still not as full of new homes as it once was.
The latest numbers, which were published on Wednesday, showed that the number of homes available for sale fell by 2.1 per cent to 2.9 million in the December quarter.
The rate of decline is still below the 6.4 per cent average annual growth in new home sales that has marked Sydney’s market since 2010.
The trend has continued in the March quarter, when the rate of new home starts was down 0.5 per cent.
The average annual gain in new homes in the third quarter of this year was 0.6 per cent, according to data from Domain Group.
The quarterly average gain in the second quarter was 1.9 per cent and in the first quarter was 0:0.
Even if the rate falls below the six per cent rate of growth seen in the past three years, the market is still expected to hold onto its current level of supply of 873,000 dwellings, according the Sydney-based Real Estate Institute of NSW.
The market will still be able to support housing supply in the short-term, but it is unlikely that this will last for long.
“This is a very challenging period for the market,” said Chris Giesbrecht, the managing director of RPIC’s Sydney office.
“We are in uncharted territory in terms of the pace at which the market can respond to supply shocks and demand shocks.”
“In terms of housing supply, it is still very early days, and we are going to see a lot of uncertainty in the market going forward.”
But while the market may remain cautious, the return of some normalcy is likely to have an impact on the cost of housing.
While house prices are rising faster than wages, there is also some evidence that people are using more of their savings to buy a home, with some economists estimating that it will take up to three years for the cost to return to normal.
The data also shows that in the year to March, the average annual income for households was $3,927, compared to $2,717 in the same period in 2016.
This is higher than the average income for the whole of Australia, but still below those of the developed world, where incomes tend to be higher.
“In general, people are spending a greater proportion of their income on housing, which is really pushing up the costs of housing,” Mr Giesbrot said.
What you need to know about Sydney’s booming housing market: “The average monthly house payment for a household in the state of NSW is $1,200, which means that a typical Australian household spends $6,000 on housing.”
“The Australian average annual house price is $2.8 million, which equates to an annual income of $4,200.”
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