Sydney's house prices, along with those of other regions-like Melbourne-have risen to about 25-30% of their market value. This has given rise to the study that Sydney has become one of the cities of the world where property prices have gone to astronomical values. News AU points out that these prices aren't sustainable at all, making it one of the ten metropolises in that list.
Of the three reasons for why Sydney and Melbourne made it to the list, the most cited are the demand of the buyers, scarcity of supply or lack of available houses, and how high inflation rates have driven prices up. While Sydney experienced a boom in property, the trend shows that the time may soon be up and that foreign investments may also keep prices out of reach.
Per Business Insider, some of the Australian cities that share the undesirable list with Sydney and Melbourne are Hobart and, to some extent, Brisbane, Adelaide, and Canberra. In contrast to the two top cities on the list, the other cities appear to be overvalued by about 0 to 10%. Perth and Darwin, meanwhile, share the same spot with each other as cities which remain undervalued.
The ratio was measured over a 30-year period. It was still around 3.6 times during that time, but now, Australian property values have risen 5.8 times. The only way it can get back to the values it enjoyed back then is if it declines by around 38%. Only then will prices start to come back to its historical median.
The case may be that prices will still rise, but all things decline over the years. The same is expected with the prices in Sydney and Melbourne. It will be the prices' turn to drop, but, for now, buyers are dropping by a quarter of what they were last year.
Sources calculate that the prices wouldn't be able to recover even if spring came around. It would take much longer than that. That being said, however, it would not take a long time for prices to go back to affordable levels. In the meantime, those searching for homes could make use of the information and buy homes in the designated affordable regions.
