Hello everyone and welcome to our first post for 2011.

 We thought we would start the year by forecasting the Sydney real estate market, easier said then done I know but there are certainly a few elements that we at Going-going-sold look at before we get to carried away with our predictions.

Firstly we are big believers in infrastructure and housing developments, and it’s frustrating to know that our great premier of NSW, Kristina Keneally does not agree with recent claims by BIS Shrapnel that Sydney will drop behind Melbourne in population within 30 years due to a housing shortage. According to industry experts Sydney’s housing market faces more challenges than Melbourne and has greater chronic housing shortages.

A recent report by the economic forecaster BIS Shrapnel claims that, Victoria is constructing homes at double the annual rate of NSW, pushing up home prices in Australia’s most populous state and shutting out new immigrants. The report states Sydney’s annual rate of population growth will fall from a projected 1.1 per cent to just 0.9 per cent a year, while Melbourne projects a long-term population growth of 1.3 per cent per year.

The figures predict Melbourne will displace Sydney as Australia’s largest city by 2037. The current level of home construction in Sydney is only at 9500 and has been below the city’s average of 17,500 a year for the past decade and well short of the Labor government’s own target of 25,000.

Although the Sydney’s house prices have defied even bullish forecasts to post strong gains at the start of 2010, led by the Eastern Suburbs, Inner West and Lower North Shore, with many predicting the momentum will flow through to the rest of the year and into 2011. Buyers are being urged to enter the market now before prices move further away from them because as I have said in previous posts that Sydney is forecasted to grow by 21% up until June 2011 as this forecasted growth is on the back of ongoing positive incentives for property investors and homeowners that are looking to upgrade and enter into the market.

Although positive incentives from the government is one thing but what happens after June?

Is the lack of government spending on infrastructure and the naïve outlook on housing shortage effect the Sydney market and in return will our market start to plateau?

Let’s hope not!