More or less mirroring developments in Auckland, Sydney property prices surged 12.4 per cent in 2014.
Howeevr HSBC Australia chief economist Paul Bloxham warns that things will cool off when the Reserve Bank hikes interest rates in 2016.
“Sydney house prices are running at an unsustainable pace,” he said. “Purchasers need to be very careful, because at some point there has to be some correction.”
HSBC is forecasting Sydney house prices to be broadly flat in 2016 rather than suffer a big fall. “The more Sydney house prices go up, the more likely it is that they will have to correct, and that’s not necessarily a bubble,” Mr Bloxham said.