Just last year, financial institutions were predicting doom and gloom in the housing sector. Yet, in its latest report, the ANZ Bank has forecast that Sydney houses will rise to a high of 19% during 2021. In 2022, the property market should slow to a 6% growth rate. With the exception of the inner city and high-rise apartments, prices in most housing sectors will rise according to the bank’s report.
Senior Economist suggests that the Australian Prudential Regulation Authority APRA will introduce measures to slow down the growth in house prices next year.
For more than forty years, property markets in Sydney have performed consistently well. The demand for Sydney houses in Sydney will continue to grow, especially in the inner and middle ring areas.
Demand for property in the lifestyle locations like Byron Bay and Wollongong and the seaside suburbs should do better than the overall market. The demand for apartments, however, remains constrained especially when it comes to high rise apartment blocks.
Sydney is definitely experiencing a sellers’ market right now. Higher demand in the property market has increased the auction clearance rates which have stayed at levels of well over 70% to 80%. This points to a market where there are more buyers than sellers, which is bound to lead to higher prices in the property market.
Investors have realised that the property that they buy now will make them big profits in the future. Buyers are particularly interested in quality property in the investment and A grade property, and in these segments properties prices are rising rapidly.
With B and C grade properties, on the other hand, the movement is much slower, and rents in the Sydney area have declined. In the south Sydney area, for example, rents had dropped by 4.1% quarter on quarter.
The high demand for property is fuelled by government tax incentives and low-interest rates. The easing of Covid-19 restrictions has also seen an improvement in consumer confidence. This is further enhanced by the promise of further cuts in interest rates, the federal budget and the successful management of the pandemic.
Has the time come to invest in Sydney property?
The economy is looking up. Over 90% of the employment losses that happened because of the pandemic have been recovered and the recession is over. The job market is growing. With the exception of high-rise apartment blocks and off-plan properties, property in Sydney will continue to grow.
We can expect the following trends to continue
- Demand for above average and investment grade properties will continue to grow and will outperform the market as a whole
- The price of average homes will also increase but at a slower rate
- As buyers seek top quality properties, C grade properties will continue to struggle.
The market segments that will underperform over the foreseeable future are as follows;
- Apartments in high rise blocks
- Poor quality investment and off plan properties
- Properties in working class areas where home owners may still feel the effects of the recession.
- Established properties in the suburbs on the outskirts of the city where people may be unemployed. Some homeowners may be battling to cope with the financial burden of high bond repayments. Many first-time home owners now make use of incentives to buy newly built homes and established homes are left in the cold.
If you’re looking to invest in property it pays to do your research first. Invest in the wrong property and you may regret it later.