Sydney House Prices Bubble Bursts

HOUSE prices in some parts of Sydney have almost halved as battling borrowers struggle to keep up with increasing interest rates.

Rising interest rates, both from the Reserve Bank and those imposed independently by the banks, have been blamed for tipping the market over the edge and "pricking the house-price bubble".

Property auction clearances remained flat over the weekend too, with rates slipping below 50 per cent in Sydney and Brisbane.

Read more here: http://www.news.com.au/business/money/story/0,25479,23681230-5013951,00.html


According to the article, Parramatta, Merrylands and Punchbowl are the worst hit suburbs, losing over $100k on the sale of the property compared to their purchase price. It seems that the reason for the price drop is the over confidence buyers had in the property market. This is quite common as everyone sees the chart pointing 45-75 degrees towards lotsa money and forget that prices CAN come down (yes, even in real estate). Predictions are that it can only get worse with the increases in interest rates as well as the increases coming from inflation. Depending on the Federal Budget this could get worse.