According to a global survey Sydney has become less affordable over the past year. The strong dollar and rising petrol prices have been blamed for the cities' rise up thr ranks of the Economist Intelligence Unit's cost-of-living list. Sydney has risen from 25th place in the world in the last survey to 16th place and was the leaset afforable Australian city. This made is less affordable than New York, Rome and Beijing, but more affordable than Oslo (the most expensive city, and Tokyo ranked second. The survey compares the price of goods and services in 130 cities and uses New York as the base index of 100 for compaison - sydney has an index rating of 108). It is used by companies as a guide for calculating living expenses for Executives and their families being sent overseas.
It looks like we're setting the scene for the next upward curve in the property cycle, building approvals are at their lowest level since January 1987, added that we're not incurring new debt at the rate we were and starting to save money and many households are stepping up the rate at which they're paying off their debt. In fact, retail spending figures for Janaury showed that NSW customers were the most budget conscious, increasing their spending at half the national rate - even though it wa post-Christmas sales time. The Reserve Bank's head of exonomic analysis has even been quoted as saying that households are likely to keep repairing their balance sheets this year.
Once we have paid off the debts and put some money away, we'll be ready to start spending again. There is already talk from experienced property investors, who are eagerly watching the market from the sidelines and trying to predict the next 'up' in the property cycle. Property websites such as realestate.com.au are reporting an increase in usage, and with falling vacancy rates and increased demand from tenants, residential property is looking increasingly attractive.
Macquarie's head of property research, Rod Cornish says Sydney will move from downturn to stabilisation later this year, with some quarters showing flat growth, some showing positive growth and some falling. There seems to be a general consensus that despite positive signs it's still too early to call the bottom of the house price cycle.
Under a State Government plan to change the decades-old strata title system, the demolition of old blocks of flats in inner Sydney to make way for new housing could be made easier. The Property Council of Australia wants a majority vote arrangement, under which 75% of strata Owners would need to vote in favour of a sale, redevelopment or demolition proposal for it to be accepted (currently all Owners must agree unanimously). Nearly 60,000 strata schemes now operate in NSW, with half of them applying to buildings with five or fewer lots.
The Property Council’s NSW Executive Director Ken Morrison is quoted as saying “Our cities run the risk of sitting in a Strata straitjacket where we aren’t able to evolve and grow because we don’t have a workable mechanism to unwind strata schemes when they get to the end of their life.
