Sydney property bubble
The state of the property inspection market in the Sydney region of Australia is currently influenced by several factors. First, a speculative bubble in the Sydney housing market has had a significant presence since early 2014. This speculative bubble has led to increased demand for property inspections as potential buyers and investors seek to ensure that they are making informed decisions in a volatile market.
Additionally, research conducted by Hatzvi and Otto between 1991 and 2006 found that a significant proportion of the variation in property prices in western regions of Sydney cannot be explained by either rents or discount factors, suggesting a possible speculative bubble. Furthermore, the demand for property inspections in the Sydney market is driven by strong growth in demand for inner-city housing. This demand comes from both negatively geared domestic investors and foreign investors, particularly from Asia, with a focus on Chinese investors.
Sydney Residential Property Trends
Other underlying causes contribute to the state of the property inspection market in Sydney. These include population growth, urbanization, changes in government policies related to housing and investment, and shifts in the overall economic climate. As a result of these factors, the property inspection market in Sydney is currently experiencing high demand.
- According to a report by Domain, the average cost of a building and pest inspection in Sydney is around $500 to $700.
- In a survey conducted by realestate.com.au, 92% of homebuyers in Sydney stated that they would be willing to pay for a building inspection before purchasing a property.
- According to a study by Archicentre, around 30% of homes in Sydney have at least one serious defect that needs repair.
- A report by the Australian Institute of Conveyancers NSW Division found that over 60% of Sydney homes have dampness or mould issues, which can lead to health problems and costly repairs.
- In a survey by the NSW Fair Trading, 20% of properties inspected in Sydney failed to meet pool safety requirements.
- According to a report by the Real Estate Institute of New South Wales (REINSW), the average auction clearance rate in Sydney for the 2021 calendar year was 78%, indicating a high demand for properties in the market.
- A study by the Domain Group found that the most common issues identified in building inspections in Sydney were related to roofing, drainage, and electrical systems.
The unique characteristics of the housing market have also influenced the high demand for property inspections in Sydney. Melbourne had a bubble towards the end of 2015 based on the 95 percent critical value, but it disappeared in January 2016. This indicates that the Sydney market behaves differently than other capital cities in Australia, including Melbourne. (Source: Melbourne had a bubble towards the end of 2015 based on the 95 percent critical value, but it disappeared in January 2016). In Sydney, housing prices have been driven by strong growth in demand for inner-city housing, both from negatively geared domestic investors and from foreign investors, particularly from Asia, especially China (Source: In Melbourne and Sydney, housing prices have been driven by strong growth in demand for inner‐city housing, both from negatively geared domestic investors and from foreign investors from Asia and, in particular, China).