Sydney property prices set to rise

Property prices in Sydney are set to climb despite talk of a continuing slump due to rising interest rates and low levels of affordability, according to property analysts.

New figures released this week by Residex reveal Sydney property values have risen by more than six per cent in the past year. While gains have mostly been in the more affluent suburbs, overall Sydney has recorded a growth in median home values of 6.39 per cent in the year to the end of March, 2008.

Head Residex statistician John Edwards predicts Sydney values to increase by six to eight per cent this year. 'For the next couple of years there will be growth, particularly in the unit sector,' Mr Edwards said.

'If you can afford to buy you must do it now because it's not going to get any cheaper.

There are sellers out there being tapped on their shoulders to sell by their banks, and there will be bargains to be had, even in the middle to upper socio-economic suburbs,' he added.

Others are optimistic too. Macquarie Bank chief economist Rod Cornish said he does not expect prices to drop by the 30 per cent figure recently reported, and instead predicts a slower recovery this year.

'What would have been quite a reasonable year will be pushed out by rising interest rates, and so I predict this year to be reasonably subdued,' said Mr Cornish. 'But with the potential for rates to be cut next year, we have good indicators for growth next year.'

The best-performing suburbs, according to Residex, were Whale Beach, where the median value grew by more than 25 per cent to $3.792 million in the year to March, followed by the inner city suburb of Chippendale, where a 25 per cent rise pushed values to $638,500.

The eastern beachside suburb of Bronte was third, with a 24.4 per cent hike to a median of $2.208 million.

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