Spring is traditionally a frenetic time of year for the Sydney property market, with plenty of stock on the market and buyers out in force.
However, with our city only just emerging from a 107-day lockdown, today’s property market is a bit different from any other we’ve seen previously.
We explore what’s happening in the inner city and CBD real estate market right now and what you should expect if you’re looking to buy, sell, lease or rent in the run-up to the end-of-year.
The Sydney property over 2021
When Sydney entered lockdown in late June 2021, the real estate market was booming. In fact, between the start of the year and 30 June, the city’s median dwelling price lifted 15.4%, according to CoreLogic data. That’s the highest rate of growth it has recorded since 1989, more than three decades ago.
If anything was going to put an end to the rising market, it should have – and could have – been lockdown and its accompanying restrictions. As real estate agents, we were unable to hold open homes or physical auctions and could only show properties to potential buyers and tenants one-on-one.
And yet, far from falling, prices actually rose another 5.7% over the September quarter, according to CoreLogic. That means the median Sydney dwelling price now stands at $1,056,093, while the median apartment price is now $882,860.
Our lockdown observations on the Sydney property market
With most people working from home, COVID-19 has forced many people to rethink their property requirements. And high on people’s list of priorities has been more room. What we noticed was that over lockdown, enquiries increased from people looking to upgrade to a larger apartment so that they could accommodate a home office or larger living area.
This trend towards more space is also reflected in the Domain sales data which shows that the median value of a three-bedroom apartment in the Sydney CBD lifted 21.6% between 2020 and 2021.
At the other end of the spectrum, we’re seeing increased sales activity from first home buyers who are finding that record low interest rates mean that, in many cases, it has become a similar price to buy compared to rent.
For instance, the median rent for a one-bedroom Haymarket apartment is $570 a week while the median sales price is $785,000, according to CoreLogic. Assuming a 20% deposit and enough savings to cover stamp duty, a buyer could potentially take out a 30-year principal and interest home loan at an interest rate of 2.30% and pay $2,417 a month, or $558 a week, according to MoneySmart’s mortgage calculator.
The only people who have been missing from the market in great numbers since COVID first struck have been investors. However, this is beginning to change with ABS lending data showing that in August 2021 investment loans were up 92% compared to the same time last year.
Emerging from lockdown
As we emerge from lockdown, we’re noticing both an increase in the number of listings hitting the market and also in the number of buyers actively looking for property. As a result, we expect the sales market will continue to be busy over the remainder of the year.
A lot of buyers make Christmas their deadline for moving into a home, and with it now less than a couple of months away there is a lot of impetus for people to act decisively. When time is short, the sales process tends to speed up, with solid offers coming in early, often pre-auction.
While the rental market has been quieter, with fewer people moving about than normal, we expect activity will increase here too. After all, international arrivals account for a reasonable portion of the rental market in our key areas of inner-city Sydney, including the CBD, Haymarket, Pyrmont, Ultimo and Chippendale. These tenants have by and large been missing from the market over the past 18 months.
As borders reopen and universities and businesses return to full capacity, this is likely to change. When it does, vacancy rates should fall, placing greater pressure on rents. For this reason, our advice to tenants is to make a move now, while the market is in your favour rather than waiting until the New Year. By then, conditions are likely to have changed significantly, with greater competition for somewhere to live.
2021 has been a unique year for the Sydney property market, especially in the centre of the city. While we’ve suffered from a lack of overseas arrivals, this has been offset by strong demand for spacious apartments and strong gains in the premium market.
As the year draws to a close and we enter a new phase of living with the pandemic, we expect market activity will become more widespread. That’s particularly true of the rental market and the sales market in one- and two-bedroom apartments due to the re-opening of both borders and the economy.
If you’d like to know more about the state of the current market or how Metro Realty can help you contact our expert team today.