Is all this a baloon? Boom time: Sydney house prices set to rise strongly

Head of SQM Research, Louis Christopher: "Currently we are seeing price growth of 9-12 er cent for 2013 and we think that is going to accelerate in 2014." Photo: AFR

With tales of properties selling for staggering prices, Sydney home owners think they are sitting on gold, and one expert agrees.

The head of SQM Research, Louis Christopher, is predicting bullish price growth of 15-20 per cent for Sydney in 2014.

''It will be potentially a one-in-50-year event next year,'' Mr Christopher said. ''Currently we are seeing price growth of 9-12 per cent for 2013 and we think that is going to accelerate in 2014.''

43 Park Street Erskineville: Sold or $890,000, $140,000 over its reserve. Photo: Supplied

His third annual Housing Boom and Bust Report said Sydney is heading into boom mode.

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Eastwood residents would most likely agree after an unrenovated three-bedroom brick bungalow at 13 Richards Avenue sold for $2,385,000, more than $1 million over the reserve.

Similar tales are emerging from the inner west. On election day a derelict two-bedroom terrace at 43 Park Road, Erskineville, sold for $890,000, $140,000 over its reserve.

Mr Christopher said Sydney's price growth will be a dilemma for the Reserve Bank: ''Will they lift rates because of what is happening in one housing market?''

He said if so, it could cause resentment from other cities which were ''behaving themselves''.

But not everyone is convinced.

''There is next to no prospect that the Sydney housing market will grow at the same rate as the great boom of 2001-03 because the macroeconomic conditions just won't support it,'' said the senior economist at Australian Property Monitors, Andrew Wilson.

Dr Wilson said price growth is running at 10 per cent for 2013, but ''given rising unemployment and Treasury forecasts it is likely we will see a moderation in prices growth moving into 2014''.

The senior manager of residential residential property at BIS Shrapnel, Angie Zigomanis, said Mr Christopher's forecasts are possible but not probable.

''The Sydney median house price growth should be 5-7 per cent in 2013,'' he said. ''Next year it is likely to be 1 or 2 per cent stronger, so perhaps 6-8 per cent in 2014.''

Richardson & Wrench agent Fred Jabbour sold a 1950s shack at 27 Beach Street, Tennyson Point, on Saturday for $3,788,000, nearly $500,000 above reserve. Instead of celebrating he is concerned.

''If prices accelerate too quickly they will come back just as quickly,'' he said. ''Prices can't continue like this. It's unsustainable.''

Source: Smh.com.au