Sydney Property Market

The Sydney Property Market – June 2021

Over the last 22 years as buyers agents in Sydney, we have experienced all property market cycles – booms, downturns and everything in between.  The Sydney property market for the March quarter of 2021 however is the strongest we have ever seen. We’re very interested to see the results of the June quarter when they are released.

Our observations are backed up by Core Logic’s recent update of their home value index.  The index recorded a 2.97% rise month on month for May 2021 (with 3.47% for houses and 1.76% for units) and 11.16% rise year on year (14.83% for houses and 2.8% for units).   It is important to note that when looking at these figures, they represent an average across the whole of Sydney.  We have seen larger increases in many instances across the suburbs in which we operate.  Some recent examples can be found in our blog by clicking here.

Auction clearance rates for the start of 2021 have been largely in the high 70-90% range, with 20 March recording 90%. “Super-Saturday” reached 88% on 27 March despite having a record number of auction listings at 1,227 properties. (a high clearance rate is generally regarded to be above 70%).

Predictions?

While we expect the market to remain strong, it is not likely to maintain the same growth momentum.

Key indicators for the housing market include interest rates, economic conditions and credit conditions.  Currently all of these are working together to fuel the market growth, coupled with limited stock numbers and strong buyer demand.

Most analysts are not predicting any movement upwards in interest rates in the short and medium term, and economic outcomes are better than predicted.  However there may be some pressure on APRA to tighten credit to slow the market.

Investors should continue to be focused on areas that have new transport and amenity infrastructure planned, including suburbs along the Sydney Metro and also the planned Northern Beaches tunnel link.

What are the factors that will continue to drive demand?

  • Record low interest rates are the main driver. The official RBA rate of 0.10% is at an historic low and is keeping borrowing costs very low for both home buyers and investors.  Many economists are expecting that rates will remain very low in the years ahead
  • Covid vaccines around the world appear to be showing success providing “light at the end of the tunnel”
  • Demand for property from investors will continue although at more modest levels. Gross rental returns are currently averaging around 3%, which although reduced, is currently relatively attractive compared to bank deposit rates and some share market returns.
  • The Australian economy is still relatively strong and resiliant. National economic growth was 3.1% to December 2020
  • The national unemployment rate is continuing to fall and is still relatively low at 5.8% (February 2021) with NSW at 5.6%.
  • The NSW State Government has major infrastructure projects currently under construction and also further projects planned. NSW continues to the be the strongest performing economy in Australia.
  • Stamp duty concessions for first home buyers.
  • The allure of Sydney as an attractive and vibrant international city, with its harbour, beaches, climate and outdoor lifestyle
  • The restrictions on international travel due to Covid-19 has made many people become “home focused”

Some potential risk factors?

  • APRA may step in to restrict bank lending
  • Potential over supply of new unit developments in some areas of Sydney where amenities have not been planned properly.
  • Covid-19 issues and international political and economic uncertainty

If you have any queries on specific areas of the Sydney property market, then please do not hesitate to contact us on (61 2) 9958 4815 or by email. 

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