Sydney has one of the hottest property markets in the world right now. With a state election due at the end of March, problems with housing affordability are major the economic talking point in the city’s front bars and over kitchen tables.
Median house prices in Sydney smashed through the $1 million mark last year, contributing to the NSW capital being named among the five most expensive cities in the world.
This chart from Core Logic, released earlier this week, shows the insane growth of Sydney prices in the current housing boom:
Policymakers in the state and federal government, as well as financial regulators, have been largely watching from the sidelines so far. But that appears to be changing. Consider, in just the past few weeks:
- Treasurer Joe Hockey ordered the sale of a $39 million Sydney mansion as part of a crackdown on registrations of foreign ownership.
- The federal government also announced all overseas investors would be forced to register with the Foreign Investment Review Board at a cost of $5,000, and pay a tax of $10,000 for every $1 million paid on a house purchase.
- The Reserve Bank of Australia surprised financial markets on Tuesday by keeping interest rates on hold when a cut was expected, and noted the price rises in the Sydney housing are in contrast to lumpiness around the rest of the country.
- The NSW Premier, Mike Baird, who is likely to be re-elected on current polling, has announced plans to “supercharge” housing supply by unlocking more government land for development.
- Baird also plans to tighten the rules around price quoting, with a ban on estate agents using the term “offers over” in advertising and instead having to give price ranges.
Since last year, too, the banking regulator APRA has also been intensifying its oversight of mortgage lending.
These measures don’t alter the fundamentals of high demand and cheap finance which are driving the price growth. Altogether, it barely registers as a “tap on the brakes”. But politicians and regulators are showing an increasing willingness to make decisions, rather than just sit back and watch.