Don't believe crazy boom theory Real Estate News The scary bust has been replaced by a crazy boom. Photo: Arsineh Houspian So here we go again. The housing market bubble bandwagon is up and running - but this time it's a crazy boom not a scary bust that is being predicted by some for the Sydney housing market next year. The reality more likely is that the Sydney housing market is about as close to a boom next year as it was to the bust that was widely predicted for last year. Low interest rates, rising confidence and a surge in investor activity are the current drivers of the Sydney housing market together with a solid performance by the local economy. But the underlying drivers remain problematic for sustained high levels of house price growth next year. Sydney's unemployment rate is now rising towards 6 per cent and predicted to continue to rise. Wages and profit growth remain subdued in a low inflation economy with a stagnant stockmarket continuing to constrain growth in the prestige market. The prospect of sharply falling rental yields will also prove a disincentive for new investors. Prices growth in Sydney is likely to peak over the next six months, with continued solid growth dependent on a sustained revival in the economy and unemployment falling to or below 5 per cent. For the record, Sydney's highest annual house price growth over the past 20 years was in 2002 at 22.2 per cent. Next best was 2001 at 17.4 per cent. If, as has been heroically suggested by some, Sydney house prices were to rise by 20 per cent next year that would bring the median price to nearly $900,000. Enough said. Dr Andrew Wilson is Senior Economist for Australian Property Monitors. Twitter@Doc.AndrewWilson