By Katrina Creer From: The Sunday Telegraph January 10, 2010 12:00AM
SYDNEY’S median house price is on target to hit the $1 million mark by the end of this decade.
Exclusive figures from property analyst Residex reveal about half of Sydney’s home owners will find themselves millionaires by 2020.
This means an estimated 625,000 houses across the metropolitan area will have a value of more than $1 million.
“If you look back 10 years ago, Sydney’s median value was fairly low by comparison with today,” Residex chief executive John Edwards said. “Twenty years ago, we weren’t even at $200,000.
“The population has become used to these things. They grow to expect it and accept it.
“But it will still be very high. Salaries will have gone up, but not at the same rate as house prices.”
Outer suburbs are tipped to enjoy the highest capital growth during the next eight years.
At Rouse Hill, in Sydney’s north-west, the median house price is predicted to jump by an average eight per cent a year, from $586,000 to $1.07 million.
Similar growth is expected for Narellan Vale, Abbotsbury, Cecil Hills, Bligh Park, Glen Alpine, Woronora Heights, Wattle Grove and Kellyville Ridge.
Palm Beach, one of the top-end suburbs hardest hit by the global financial crisis, is expected to enjoy a price recovery, Residex says.
The Urban Development Institute of Australia (UDIA) says such predicted growth will affect housing affordability.
More people will be forced into the rental market, or, alternatively, out of Sydney to live in the Illawarra, the Hunter or interstate, the institute says.
Melbourne is already attracting more home buyers because of its affordability.
“Our key message is that we’re not building enough houses,” UDIA NSW chief executive Stephen Albin said. “And that’s putting upward pressure on prices.”
The Residex data is based on an average five per cent capital growth across the Sydney metropolitan area over the next decade. This is lower than previously and a result of property becoming largely unaffordable.
“Sydney has fared the worst in the nation in the past 10 years – more poorly than any other area in Australia,” Mr Edwards said.
“When houses become unaffordable, the cycle still repeats and has similar structure, but the rate of growth diminishes. That’s what’s happening now.”
Even so, median house values are predicted to hit seven figures by 2019.
Mr Edwards said the State Government needed to embrace regionalisation and encourage families to move to outlying centres such as Bowral and Mittagong by providing fast trains.
Apartments in areas close to the city, such as Cremorne Point and Balmain, are expected to make strong returns for investors by 2020, while Residex figures show rents are set to rise from this year as demand for properties increases.
Rowena and Anthony Hojel paid $547,000 for a four-bedroom house at Rouse Hill in July last year through Starr Partners, Kellyville.
The couple sold at nearby Riverstone and made the move because they liked the parks, schools and shopping centre.
They were stunned by the projected price growth for their new home, but concerned about how their sons Joshua, seven, and Lachlan, five, could ever be able to buy their own homes.
“It’s something I worry about,” Mrs Hojel, a part-time administrator, said.
“Everyone struggles and has to make sacrifices now. If we didn’t have another property to sell, I don’t know how we’d have done it.”sWhile around half of Sydney homes will be worth $1 million plus by the end of the decade, analysts say people should remember the rest of the market would be priced under this amount.
Even with higher than average growth over the next eight years, median house values in many suburbs would remain under seven figures.
According to Residex, by 2017 people could expected to pay $488,000 for a house in Campbelltown; $591,000 in Penrith and $694,000 in Liverpool.
Rod Cornish Head of Property Research at Macquarie Bank says Australia’s economy is headed for a reasonable period of growth, which should mean wages would continue to rise at around 4 per cent per annum.
He believes markets such as Campbelltown would remain relative to the prices of today, while Liverpool may start to become too expensive.
“These are traditional owner-occupier markets, they can only rise to what people can afford, there will not be enough investors to cover the whole area,” Cornish says.
