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Treak Real Estate Property Update: January

Welcome to the Treak Real Estate Property Update: our monthly round-up of news from the Sydney and national property markets, as well as what’s been going on here at Treak!


Nestling into the new year

And so we leave the interesting year that was 2020 behind. While the effects of COVID will be felt long into 2021, at least we bring experience and increased resilience into the new year - things that we have last year to thank for.


To be honest, 2020 will always hold a special place in our hearts at Treak. It was, after all, the year of our foundation. We’d like to take the chance to thank you, our clients, suppliers and supporters, for making our first year such a memorable and rewarding one, no matter how challenging it was at times.


The property lessons 2020 taught us

Along with the foundation of Treak, 2020 also offered up a wealth of lessons. Here are five of the most compelling that we learned.


  1. Focus on the long term: 2020 reminded many property investors that real estate investing isn’t a get rich quick scheme. A good investor looks at long-term trends, and is patient in riding out those inevitable, but always relatively small, bumps in the road.

  2. Media is increasingly in the business of entertainment, not education: Embellishment, exaggeration and straight up misinformation led many investors to make disastrous errors in 2020. 30-year investments aren’t made based on 30 minutes of news, particularly when that news is designed to generate revenue and clicks.

  3. Take economic forecasts with a grain of salt: No one really knows what's going to happen to property markets this year - unpredictability is built into the system. As such, even the most respected economists will often get their predictions wrong.

  4. There are always reasons not to invest: If you focus on the negatives, you’ll never take the leap. To enjoy reward, you need to first take the risk. The truth? The biggest risk of all is not doing anything to protect your financial future.

  5. Invest for capital growth not cashflow: Over the medium- to long-term, properties with lower rental returns but stronger capital growth delivered significantly higher overall return than ‘cashflow properties’ that offer high rental returns with lower capital growth.


Real Estate for Good

Our Real Estate for Good program was a real point of pride last year. As in 2020, we will continue to donate a percentage of our profits - 10% of letting fees from rental properties and 5% of sales commissions - to local causes, including Wayside Chapel and Backpack Bed.


Our Real Estate for Good program also informs our professional philosophy. We believe that a happy tenant just makes good business sense. They stay longer, they take better care of your place, they both save and earn you money. Our goal from day one has been to realise these benefits by keeping your tenants happy. Our recipe is simple: be warm, friendly, available and proactive. And as long-term tenant Denise Winter recently wrote, we follow through on this promise.


Renae was an absolutely amazing agent over the three years we rented. I can’t recommend her services enough; she was always willing to go the extra mile.


Thanks Denise!



TREAK PROPERTY MARKET UPDATE

What has the property market been up to in the last month or so? Read on to find out!


What’s the outlook for 2021?


After a lot of turbulence and volatility, the real estate market finished the year on strong footing. After a 2.1% drop in dwelling values between April and September, CoreLogic’s national home value index enjoyed its third consecutive month-on-month increase in December, rising a further 1%.


Record low interest rates, the confidence gained from the ongoing containment of COVID, and low housing stock have been the key factors that have strengthened the market. As a result, buyer numbers surged through the second half of 2020.


It seems unlikely that these conditions will change drastically in 2021. While stock for sale is expected to increase, it shouldn’t surge to the extent that it removes the upward pressure on prices. And having dealt with a number of COVID spot fires in the last couple of months, we are becoming increasingly adept at ensuring the virus doesn’t take hold on our shores.


Overall, 2021 is shaping up to be a strong year for the housing market given highly accommodative monetary and fiscal policy, signs of an economic recovery, and a wealth of first home buyer incentives. As always, you can expect certain areas to fare better than others, with regional housing continuing to be a favourite. A continued lull in the rental market One notable property trend that is likely to extend well into 2021 is a weakened rental market. This will continue, in Sydney at least, until overseas migration begins to ramp back up, which will allow the higher levels of supply to be absorbed.


According to data from Domain, the number of days a rental property remained on the market increased by 15% between November 2019 and November 2020, from 43 days to 50 days. And this is despite the fact that no fewer than 30.1% of advertised properties had slashed their asking price.


The inner west (36.2%) and the lower north shore (34.6%) were the areas where the greatest number of discounts were applied. These areas have been affected not just by the lack of internationals arriving on our shores, but also by the work from home revolution, which has seen tenants trade high-priced CBD-centric rentals for larger and more affordable options in the suburbs. In South Western Sydney the amount of discounted rentals actually fell over the same period, from 23.5% in November 2019, to 15.9% in November 2020, highlighting this fact.


But going back to our earlier lessons, we know that long-term investments aren’t based on such short-term trends. 2021 is a new year that will bring new challenges, but as always, property will remain one of the safest (if not the safest) investments you can make.


And that’s it from us for the month of January! Thanks for reading, and be sure to forward our newsletter onto any interested friends!


Until next time,


Renae Treak



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