Slump after Games not an issue says bank study

By GREG ANSLEY

CANBERRA - Sydney may escape its expected thumping post-Olympic hangover.

A new study released yesterday by Macquarie Bank rejected a much-prophesied slump in the city's economy as the Games-inspired construction boom ends, housing prices dive and the steam goes out of employment growth.

In a report whimsically entitled Olympics, What Olympics? the bank argues that Sydney will avoid the kind of blues that affected other host cities such as Barcelona and Seoul.

Instead, it predicts that the Sydney economy will slow only moderately over the next 18 months before rebounding to growth.

Stephen Girdis, head of Macquarie Property, said the city's residential market had already defied the experts. Despite predictions to the contrary, he said, the Games had had only a minor impact on Sydney's strong housing market of the past four years.

No Olympics housing boom meant no Olympics housing bust, Mr Girdis said.

Report author Rod Cornish, head of Macquarie Property Research, said suburbs in the Olympic corridor had been poor performers in a hot market, growing at just 0.5 per cent above the Sydney average.

The boom instead centred on beachside suburbs, where growth had outstripped even the traditional harbourside leaders.

The report also said that predicted soaring rises in rents - expected as Sydney homeowners leased their houses to foreigners in the runup to the Games - had failed to materialise. This confirms similar conclusions reached after agents letting homes for the period of the Games reported demand well below expectations.

Instead, the report said, an increased supply of housing now coming on stream would be a boon for tenants, with rents either stabilising or falling slightly.

It said that while a downturn in Sydney's housing market was already under way, it was a cyclical rather than Olympic-inspired trend, driven by higher interest rates and the boom in construction ahead of July's introduction of GST.

The report also said the present downturn would not be as prolonged as the last cycle, when Sydney house prices slumped as home mortgage rates soared to between 17 and 20 per cent.

And the market would be pushed from early 2002 through factors associated with the growing influence - and affluence - of ageing baby boomers and Generation Xers.

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