One of the country’s largest property developers believes house prices will continue to rise for years to come, with the Sydney market set for a “golden decade”.
Stockland chief executive Mark Steinert expects nationwide house prices to rise by four to five per cent on average for the foreseeable future, with Sydney leading the charge.
Despite a sharp rise in house prices in the past 12 months, an undersupply of property and improving confidence meant the growth was set to continue, he said.
“At the moment it is fair to say there is at least three years of undersupply in every major capital city,” Mr Steinert said.
“Because of this demand-supply fundamental, we anticipate at least four to five per cent compound growth in new house prices for the foreseeable future.”
Mr Steinert said the NSW government’s efforts to increase housing supply and infrastructure plans would boost Sydney’s new property market.
“We are particularly bullish on Sydney,” he said.
“I think it’s fair to say that we are going to see Sydney and to a certain extent NSW have a golden decade.”
Mr Steinert’s optimism contrasts with warnings from economists and analysts that house prices are likely to flatten or slide over the next few years.
Credit Suisse analyst James Ellis has said a collapse in prices was unlikely, but he expects prices to remain flat for several years, which would amount to a decrease in prices in real terms, relative to incomes.
“Our base case scenario is one of real erosion of house prices,” he said.
Recent figures from the bureau of statistics suggest the housing market boom is cooling, with no growth in home loan approvals in April.
Meanwhile, house prices suffered their biggest monthly fall in five years in May, dropping 3.6 per cent across capital cities, according to research from RP Data.
But prices remain substantially higher than a year ago, especially in Sydney, were prices have risen 16.6 per cent in the past 12 months.