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No let-up in Sydney real estate prices

By Louise Morrin

Making an investment in Carlton property could continue to be lucrative in the near term at least, as a new report forecasts continued growth in prices. BIS Shrapnel's Residential Property Prospects 2015 to 2018 report shows that the Harbour City performed well in 2014-15 – and this success is only likely to continue.

Sydney has seen double-digit growth in median house prices over the past financial year, making it one of the standout performers in the entire country. The city's success has largely been buoyed by strong population growth, decent economic conditions and a lack of available real estate.

This idea was supported by the latest population figures from the Australian Bureau of Statistics (ABS), which showed high levels of interstate migration to New South Wales. By the end of last year, the state's population had increased 1.4 per cent from 2013 levels.

BIS Shrapnel senior manager and study author Angie Zigomanis believes the official cash rate will play a key part in how the property market performs moving forward. Borrowers are currently enjoying all-time low interest rates, but there are concerns over how long this will continue.

"Interest rates are expected to enter a tightening phase towards the end of 2016," said Mr Zigomanis.

"After recent wage constraint, the Reserve Bank is expected to 'fire a shot across the bow' to curb wage expectations and alleviate potential inflationary pressures."

The group believes that the cash rate will increase 50 basis points in total this financial year, which is likely to have knock-on effects for property in Carlton and the rest of the country.

BIS Shrapnel predicts that some of the strongest property conditions will be seen in Sydney over the current financial year. Price growth may start to slow and enter into single digits, which will address some of the affordability concerns that have arisen in the Harbour City.

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