FP BLOG

City Growth and Housing Prices: How Sydney is Becoming London

Young couples and new entrants to the housing market are hoping for a price drop on Sydney houses and apartments, but it doesn’t look like salvation will be coming anytime soon. Top economists have predicted the contrary, saying that inflated home prices in Sydney could double by the end of the decade, making over half of Sydney homeowners millionaires.

How can the younger generation even hope to afford a home in suburban Sydney? Homes are already beyond reach for most, but if prices are expected to double, it looks like the dreams of owning a suburban home will be dashed before they become a reality.

The Australian Property Monitors (APM) postulates that the majority of young people will be renting homes instead of owning them by the end of the decade. If young couples can’t afford to buy a home, renting is a good alternative. The APM says that Sydney will become a prime example of a renting market in the next 10 to 15 years, mirroring other global cities like London and New York.

London and New York went through similar booms and busts that led to the doubling and even tripling of home prices in suburban areas outside of the urban centers. Homes in the heart of South London that were previously worth the equivalent of $200,000 dollars have risen on average property value to $600,000 dollars in the last 7-9 years.

Because Sydney is already the largest urban center in Australia, a similar situation to the housing markets of London, Tokyo, and New York is transpiring. The APM blames a rapid influx of immigrants and the last few large rural populations moving into the city for better job prospects in the age of information. A lack of rural jobs and an abundance of jobs in e-commerce are leading many traditional industrial workers into the largest cities in Australia, and as the demand for housing rises, the prices rise along with the need.