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Fri 3 May '24 with Rich Harvey Unpacking the Northern Beaches with Incredible Agents
Fri 29 Mar '24 with Rich Harvey How to build a $7 Million Property Portfolio from scratch
Sat 16 Mar '24 with Rich Harvey Why Invest in Melbourne?
Mon 26 Feb '24 with Rich Harvey Sydney’s Inner West – Hotspots and Outlook for 2024
Mon 12 Feb '24 with Rich Harvey Decoding Sydney’s North Shore Market – Outlook and Opportunities.
Sat 27 Jan '24 with Rich Harvey Home Buying in the Eastern Suburbs – A personal journey


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Property advice, market updates & more


April 2014 - Boom or Bubble. Who do you believe?

April 9, 2014 / Written by Thirst Creative


By Rich Harvey, Managing Director propertybuyer

Welcome to your April propertybuyer market update.

In this edition we look at:

  1. Sydney - Boom or Bubble.  Who do you believe?
  2. Seminar - Market Trends & Property Strategies that work in today's market - Wed 7th may
  3. Client Stories

1. Sydney - Boom or Bubble.  Who do you believe?

There has been a lot of conjecture in recent months about whether Sydney property prices are approaching bubble territory. The Reserve Bank is using open mouth operations (OMO- also called “jawboning”) to deliver their cautionary messages to investors and home buyers to not over-leverage themselves in a low interest rate environment and that property prices can fall at some point.  Even the Financial Review has run some front page articles in the last few weeks “House prices entering the danger zone” and questioned the affordability of property against average disposable incomes.

The speed of price growth in the Sydney market has been the catalyst for these concerns.  Some commentators have taken the monthly growth figure of say 2% then annualised this to suggest that price projections of 24% growth are on the cards!  This is clearly an unsustainable growth rate and creates alarm and anxiety amongst property buyers.  Average house prices have been around 4.4 times average household incomes and as property prices rise, this ratio is set to rise.  However, the rate of mortgage default in Australia has been very constant for the past 12 years according to Macquarie Bank.

Sydney home buyers and investors need to understand that property prices move through cycles.  Both you timing and your “time in” the market are critical to your success.  It is very hard to pick the peaks and troughs of each capital city cycle.  The Sydney market has been playing catch up for the last decade after the last boom that finished in 2003.  See the chart below which shows that the average annual house price growth over the last 10 years has only been 2.5% pa.  This is hardly the rate of growth for bubbles to appear!  In fact this rate is below the annual inflation rate and wages growth rate.

So it is little wonder then that we have seen the Sydney market bounce back so well over the last 12 months with low interest rates making borrowing so much more affordable.  RP Data figures show that to March 2014, the Sydney median house

Median dwelling prices March 2014.     YoY change

























                                                                                Source:  RP Data

Where is the Sydney market headed now that we have seen such strong growth?

To answer that question we need to look at the fundamentals of supply and demand for property in the Sydney market. There are four major forces at play that I believe will deliver more price growth for Sydney in the coming year.

  1. Housing undersupply
  2. Population growth
  3. Interest rates
  4. Construction boost

I expect the rate of growth to taper off as interest rates rise (predicted for latter part of year) and the market moves into a more normalised level.  After strong periods of rapid growth, Sydney prices tends to plateau and have a soft landing due to the continuing undersupply situation. If we get a major financial crisis like the GFC, then we could expect to see some correction. But this is unlikely in the short to medium term.  We have a very strong banking system with full recourse loans so with an improving economy with relatively stable employment figures.

Housing undersupply is a major issue for Sydney.  While the State Government has tried to implement a more fast-tracked system for planning permits, the proposed legislation hit major hurdles in the Senate so it was back to the negotiating table.  ANZ Economics has estimated that underlying demand for dwellings in NSW is around 43,000 pa, while actual completions is running at around 30,000 pa.  This leaves a deficit of approx. 13,000 pa and to date has accumulated to 100,000.  This undersupply puts a natural floor in the property market. (Nationally the accumulated deficit is running at around 350,000 dwellings.)

Australia has had record population growth over the past 12 months with more than 405,000 people swelling our ranks to a total of 23.2 million – no wonder the traffic is bad! The majority are locating to the capital cities but there are some notable growth in major regional centres also.  See the graphic below for more details. Population growth is an essential pre-requisite for property demand leading to capital growth.

Reproduced courtesy of Michael Matusik

There are strong predictions that there will be a solid rise in housing construction over the short to medium term. The Reserve Bank is particularly keen to see a move away from reliance on mining for economic growth and toward more housing construction.  Building approvals are trending upward buoyed by an extended period of low interest rates (NSW private sector houses rose 1.7% in Feb).

In summary, Sydney is not in a bubble – we are experiencing a strong upswing phase which has resulted in rapid price growth.  I believe there is still plenty of growth in the order of 7% to 8% for Sydney in the remainder of the year. 

At the grass roots level, we are seeing a wide range of buyers seeking to upgrade and invest.  Many buyers shy away from auction properties or where they perceive demand is too high. However, high demand for a property is actually a good thing – it shows that there is scarcity.  It also shows you have a clear exit strategy – there are other buyers lined up in the future. 

If you are getting frustrated or confused by this market you need to research individual suburbs and see what is driving that specific market.  Don’t just take the macro headlines as gospel.  Before making a bid, look at the underlying value of the property and its long term potential.  Remember, property is a long term buy.

If you are in the market to buy a home or investment property we would love to assist you. Call my friendly team of buyers agents on 1300 655 615 today to get the upper hand in a hot market, or email your enquiry. We would be delighted to help.

Rich Harvey is founder and Managing Director of, Australia's most awarded Buyers' Advocates. Propertybuyer helps property investors and home buyers search and negotiate the right property at the right price, everytime. Visit or call 1300 655 615.

2. Seminar - Market trends & property strategies that work in today's market - Wed 7th May at 6.30pm

You are warmly invited to attend a special one off event with some top line property speakers.

Where can you go to get unbiased property advice that really makes sense?  There is so much noise in the media and property magazines that it’s hard to discern the truth about the property market.

At this seminar you will learn the latest trends and developments in the property market from experts in the field.  You won’t get this information from any other source. Stop googling and start networking.  Get your questions answered in a live environment.  This event is likely to book out so reserve your ticket early.


Topics covered at this one off special event include:

  • Where is the property market heading for the remainder of 2014?
  • Is property over-valued or is there more growth to come?  is bubble talk all hot air?
  • Prospects for Sydney, Brisbane, Melbourne and Perth
  • Investment property strategies that work in today's market
  • Buying tips and selection criteria
  • Hot spots and Not spots
  • How to finance multiple property purchases
  • Is cross-collateralising ever advisable?
  • SMSF strategies for property investors

Date:       Wednesday 7th May, 2014

Time:      6.30pm registration, 7.00pm start to 9.00pm

Venue:    SMC Conference & Function Centre, 66 Goulburn Street, Sydney

Cost:       $19 single ticket, $29 double ticket




Telephone inquiries: 02 9975 3311 

Limited seating is available so book early to reserve your spot today!


1.  Rich Harvey, Managing Director and founder of propertybuyer

2. Lisa Montgomery, Head of Communications, Resi Home Loans

3. Ian Rodrigues, Director, Bishop Collins Chartered Accountants

4. Headline Speaker - TBC


4. Client Stories

Here is some feedback from a few of our happy clients last month:

Ian & Jennifer's Story

"I have no hesitation in recommending propertybuyer"
Ian & Jennifer

Buyer type:  Investor
Location:  Manly
Buyer's Brief:  Investment property in Manly.  Budget - $900k

Our Goal
We wanted to purchase an apartment (2 bedroom and parking) in either Lower North Shore or Manly, within 10% of median price and in close proximity to public transport.  Engaging propertybuyer allowed me the time to concentrate on other business activities reducing my time spent researching and travelling to inspect properties.  We were concerned about paying above market value and purchasing an inferior building in an inferior location.  Matt’s local knowledge and expertise put these fears to rest.

Our Solution
Matt continually updated a short list of suitable properties for inspection by using local knowledge of the market and listening to my requirements.  I feel confident that propertybuyer has enhanced my property portfolio with this investment.  The apartment was ideal for this location and my budget.  I would advise anybody to make a list of requirements, talk to propertybuyer, and inspect the area together.  Keep working towards your list of requirements and do not expect every property in your portfolio will be the same, be flexible, this worked for me.  I have no hesitation in recommending propertybuyer.

"I feel confident that propertybuyer has enhanced my property portfolio"

 Buyer's Advocate, Matt Corbett
Ian and Jennifer wanted an investment property within 1km of Manly Wharf. They had missed out on a couple of properties due to the over inflated market but their patience paid off when I scored a great 2 bedroom, 2 bathroom apartment within 300m of Manly Wharf.

Rosemary & John's Story

" impressed with your service"
Rosemary & John

Buyer type:  Investor
Location:  Waverton
Buyer's Brief:  Solid investment property in the Lower north shore. Budget - $900k

Our Goal
We wanted to purchase an appropriate investment property within a defined area of Sydney and within a defined budget, we felt that it wasn’t viable to do ourselves.

Our Solution
Propertybuyer provided the services we required in an extremely thorough and timely manner.  Afterwards we felt very satisfied.  We are both just so impressed with your service.  Matt Corbett is a credit to your organisation.  We highly recommend propertybuyer, they are thorough and very attentive to your requirements.
"Professional, thorough and very attentive..."

Buyer's Advocate, Matt Corbett
John and Rosemary were seeking an investment property in Sydney’s Lower north shore. They were happy to renovate if the money spent resulted in a significantly higher yield and was within their budget of $900k.  We came close to purchasing two properties but one of them had possible waterproofing issues and the other went over our appraised value, which was a common occurrence in the current market.

Through my agent network, I located an off-market property and secure it for a good price.  It was very well located within walking distance to the train station and in a nice, well-maintained block.  It required renovation and I arranged a builder to quote and John accepted.

If you are interested in any of the above please contact Jason Low (Manager- Client Relations & Strategy) 1300 655 615 or 02 9975 3311 or email your enquiry to

To review the full details of these opportunities you will need to sign a simple confidentiality agreement which protects our interests in the property. If you purchase a property, a fixed sourcing fee will apply.
We look forward to assisting you.

The Propertybuyer

Fri 3 May '24
with Rich Harvey
Unpacking the Northern Beaches with Incredible Agents
Fri 29 Mar '24
with Rich Harvey
How to build a $7 Million Property Portfolio from scratch
Sat 16 Mar '24
with Rich Harvey
Why Invest in Melbourne?
Mon 26 Feb '24
with Rich Harvey
Sydney’s Inner West – Hotspots and Outlook for 2024
Mon 12 Feb '24
with Rich Harvey
Decoding Sydney’s North Shore Market – Outlook and Opportunities.
Sat 27 Jan '24
with Rich Harvey
Home Buying in the Eastern Suburbs – A personal journey


Listen to many more
podcasts on our
Podcasts page.