Property Values in Sydney
Real estate has taken quite the ride since early 2020. When the global pandemic hit, real estate experts were unsure what to expect. Stay-at-home orders impacted everything, from inspections and closings to auctions. Dread mounted as pessimistic bank forecasters braced for a downturn that never came.
Despite some volatility across the Australian marketplace, Sydney’s residential real estate market continues to display its resiliency. There is a strong demand for houses — particularly those in the inner and middle-ring suburbs — in Sydney that shows no signs of retreating anytime soon.
Real estate price movements
According to reports from ANZ Bank, house values in Sydney will continue to rise to a strong 19 per cent through 2021. In a previous forecast, ANZ only predicted a 9 per cent national rise.
News that the Sydney property market is excelling should surprise no one. Sydney’s market has been amongst the strongest performers in the national real estate market over the last 40 years. As lenders continue to entice borrowers with record-low interest rates, the local and national market has trended toward sellers. Buyers are bidding large sums at real estate auctions, whilst buyers are making offers well above the asking price in Sydney and across the nation.
What is fuelling the boom? Pent-up demand from a 2020 spent mostly in lockdowns. Other factors include:
-
Remote workers. With more businesses allowing telework, some buyers have set their sights on larger accommodations since they are spending more time in their homes.
-
Record low interest rates. Interest rates already are at record lows, with some hovering around 1.69 per cent. These ultra-low rates are likely to stick around for a few years, making it more attractive than ever to buy.
-
Low inventory. The volume of buyers far outpaces the available real estate on the market in Sydney and most of Australia early in 2021. In February alone, available houses were down 26 per cent from the previous year. With more buyers tempted by low interest rates, the supply simply cannot keep up with the demand.
Price movement forecast
Sydney prices are enjoying a 6.7 per cent increase in the first quarter of 2021, posting the most robust quarterly growth it has experienced since 2015. March numbers for Sydney were strong, with dwelling prices up 3.7 per cent for the same period in 2020. This pent-up demand pushed the median home price to $1.1 million and units to $755,360.
The economy is also recovering faster than anticipated, with fewer distressed homes entering the Sydney market than previously predicted. Low interest rates and government tax cuts are helping to fuel the speedy recovery.
Auction activity during the first quarter of 2021 indicates brutal competition amongst buyers. Sydney posted a final auction clearance rate above 80 per cent for more than a month. The trend is expected to continue.
As more property owners are enticed to take advantage of the current seller’s market, inventory is expected to rebound slightly as the year presses on.
Daily Bulletin