Unstable markets in uncertain times - but not for Sydney house prices.
As lockdown trudges on, one thing that has not felt the cold brunt of covid economic woes is Sydney property prices. If anything, they’re benefiting. We have seen the average property price rise a staggering 24% in the last 18 months alone. The nation's largest city now holds the title for the most expensive median house price, coming in at $1,410,133 which is set to increase further.
So why the unprecedented rise, and why has it not been affected like so many other sectors? Many economists and property experts have hypothesised that a number of factors have come into play resulting in the spike.
The first being the shift to working from home. With many industries making the semi to permanent move of uprooting employees from office spaces to a home desk, this has created a zeitgeist around the importance of your homestead functioning not just to reside in, but to work in also. Many property owners or prospective property owners are looking to relocate or renovate based on this factor. With space and work functionality now more important than ever, one can understand how Sydney property prices are continuing to rise.
Another key factor that is contributing to the rise in property prices is simply the rise in demand. With many people unable to travel overseas for work or pleasure, there has been a focus shift on investing money on long-term investments within Australia, i.e property. Alongside this, recent low-interest rates for mortgages have influenced many to jump on the property bandwagon now.
Although property prices have risen citywide, some areas have felt the spike more significantly than others, most notably the salubrious Northern Beaches. Compared to the city’s average house price growth of 24%, the Northern Beaches average property price grew by an astonishing 34%, further cementing the popularity and prestige of this Sydney LGA.
What is clear from the spike in these particular areas is that people are willing to spend in suburbs that provide them with plenty of recreational space and amenities, such as beaches, parks and respected schools. As time is increasing at home, property owners want to make sure they are located in a place that provides the most comfort.
Our Principal Real Estate agent, Michael Clarke, said recently “There are only a few things that people can focus on at the moment. One is being in lockdown, another one is their home, and the other one is their geography. Eighteen months ago, a study wouldn’t necessarily add any value, whereas now it’s one of the first and most important items on the agenda.”
Michael went on further to say “Sheer buyer demand from across the board, whether they are first-home buyers, upgraders or downsizers, is driving up prices”.
So what does the future look like? Will this growth continue? According to forecasts released by NAB, they have predicted that house prices could rise a further 21% in some areas of Sydney by the end of the calendar year. However, Westpac economists Matthew Hassan and Bill Evans have come out and said this “price growth may stall altogether, particularly in Sydney where restrictions look set to last for some time yet. However, any slowing is very likely to be transitory, with easing restrictions and a national economic rebound driving a subsequent re-acceleration”.
And while no one knows for certain how this trajectory will play out, one thing is for sure; Sydney property in the Northern Beaches will always be one of, if not the most competitive and elusive markets in Australia.
Need help getting on the property market? Talk to the experts today at Clarke & Humel and make your dreams a reality.