Property prices aren’t solely affected by interest rates…
Much has been written about the impact of rising interest rates on our city’s real estate market, but they’re not the only factor driving property values. Among five other factors that can also influence the rise or fall of prices in Sydney’s eastern suburbs, we examine five others.
1. Exchange rates
Some overseas buyers are foreign investors, others are ex-pats searching for a base or investment at home in Sydney’s eastern suburbs. This segment of the market operates more or less independently of interest rates because virtually nothing matters more than the value of the Australian Dollar for these buyers.
2. The global economy is uncertain
There is no doubt that global political and economic uncertainty, including trade disputes and geopolitical tensions, directly impacts all markets, from the ASX to bond prices, and from agricultural commodities to oil prices.
As a result, it can have an impact on the local real estate market as well.
When a person is worried about the outcome of their future, they are also more cautious about spending money on anything. This leads to sellers holding off on listing their property for sale. This explains why political and economic instability are often accompanied by lower property activity.
As a result, when a vendor withdraws from the market, home values are actually boosted because it reduces inventory and helps cushion potential price declines.
3. Demographic shifts
As we grow older, our life patterns and desires change, and the property we want changes with them. At the moment, one of the biggest trends we’re seeing is Baby Boomers retiring.
The Baby Boomers, which include anyone born between 1946 and 1965, make up 21.5% of our population and are now aged 57 to 77.
We also see strong demand for oversize apartments near shops as people consider downsizing from the family home. This is driving a new wave of luxury developments across the East, pushing apartment prices to a new record.
The majority of home owners in the eastern suburbs are now members of Gen X (aged 42 to 57), while Gen Y is the dominant group in Randwick, Kensington and Maroubra. In the course of their lives, these buyers will also change their expectations when it comes to their property purchases.
4. Population growth
According to the 30th of June 2021 census, Sydney Eastern Suburbs had 258,554 residents, and the metro area population of Sydney was 5,121,000.
The East is characterized by its sea views and harbor. As more overseas residents and ex-pats move here, we will see greater competition for prime properties and a growing need for luxury apartments.
5. Pandemics
Last but not least, a major shock such as a pandemic can profoundly affect the housing market.
With borders closing and fear taking hold, people initially chose to stay at home rather than move. As the epidemic progressed, however, more people invested time and money in their homes.
The market took off in a way that virtually no one anticipated, especially when it came to family homes and lifestyle properties.
One of the most important things to take away from all of this is that while external factors can affect property prices, no one can predict how they will change in the future. It is always a good idea to focus on the long term when investing in quality property in Sydney’s Eastern Suburbs.