Sydney forecast to lead recovery

According to an article in the Property Investor Magazine (June07), “Sydney will lead the way as Australia’s capital city housing markets move on an upward trajectory over 2007 and 2008, a report from Advisor Edge predicts.”

In his National Property Sector Review, Advisor Edge head of property research Louis Christopher wrote that after a three year downturn there were increasing signs a housing recovery was under way on the East coast of Australia.

Christopher cited “the close historical correlation between asset prices and Australian money supply (M3) as evidence that house prices should climb this year and next.”

The article continues on to discuss the correlation between money and assets and the historical evidence of bubbles in house prices as a result. He says that as a result of the growth of money being at it strongest rate since the last recession that Sydney can expect to see house prices “climb by 10.5 per cent this year and a further 9 per cent next year citing improved affordability, improving interstate migration rates, comparative price levels with other cities and rising rents as the factors that show Sydney is due to turn things around.”