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Treak Real Estate Property Update: May/June

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

The rise and rise of the Sydney property market

The numbers are quite eye-watering. In a total flip from the doomsday predictions made at the start of the pandemic, when none other than the Reserve Bank of Australia said that a 40% decrease in property values was ‘plausible’, property prices have skyrocketed.

Sydney property values rose another 3% in May, and a total of 6.3% in the last quarter. Auction clearance rates have been sitting at an almost unheard-of 90% in most parts of Sydney. The reasons are many and varied, but almost all market forces are pushing prices up, including:

  • Low housing stock

  • Government tax cuts

  • Record-low interest rates

  • A strong rebound in consumer confidence

As long as each of these factors stays relatively stable – and signs suggest they will, at least for now – property prices will continue to rise, and investors will continue to achieve excellent results.

Breaking the numbers down further, value gains were stronger in Sydney’s prestige market, which increased by an incredible 12% in the last three months, and while gains at the lower end of the market weren’t as dramatic, it still rose 5.2%.

The prestige gains can be seen when we look at the top performing regions of last quarter:

  • Sydney Eastern Suburbs: +11.1%

  • Sydney Ryde: +10.6%

  • Sydney North Sydney and Hornsby: +10%

  • Sydney Inner West: +8.9%

  • Sydney CBD and Inner South: +7.4%

  • Sydney Inner South West: +7.3%

House prices continue to outperform unit prices in Sydney, rising 3.5% in May alone. Currently the median house price is approximately $1.2m. This has unsurprisingly led to affordability issues for buyers, causing many to look to the unit market as the only viable option. The knock-on effect is that unit prices have also risen with the increased demand, with the median value rising 1.8% in May. Family-friendly apartments in Sydney’s inner suburbs are proving particularly popular.

The 2021-2022 Sydney property market forecast

That’s where we are. But where are we heading? Can these increases be sustained?

In ANZ’s latest economic insight, Housing: Powering Ahead, the bank’s economists said that ‘ultra-low’ interest rates are currently supporting the housing market. Meanwhile the combination of strong demand and low supply is pushing prices significantly higher. As such, ANZ predicts prices to rise by a ‘sharp’ – and totally unprecedented – 17% across Australian capital cities. What’s more, they project the top performers, which they say will be Sydney and Perth, will exceed even that number.

There are winners and losers in all property market shifts, particularly in any this dramatic. In this case the winners are owners, investors, and anyone else who has already taken their first step onto the property ladder, and the losers are first home buyers, who are increasingly being priced out of the market.

In order to counter these endless gains, ANZ senior advisor Felicity Emmett expects intervention by the Australian Prudential Regulation Authority (APRA). She believes it’s likely that the regulator will introduce a number of macro-prudential policies designed to slow down house price growth in 2022, aiming for approximately 6% rather than this year’s 17%.

All in all, it’s been quite the turn around. From a finance sector that was floating the prospect of a property market doomsday just 12 months ago, the Sydney property market has now almost become a runaway train, with APRA potentially being forced to pump the brakes.

Sydney rental market update

What of the rental market? Prices for Sydney house rentals are +2% and units +1.8% over the last quarter. Nevertheless, the lack of international visitors, workers and students means that unit rents are still -7.5% when compared to their 2018 high. This is also one market that has seen an increase in availability, with many short-term and holiday rentals being transformed into long-term/permanent rental accommodation, as landlords attempt to generate revenue from their investments while tourist numbers are low.

That’s the state of play, which brings us to our next question:

Is it the right time to enter the market?

While buyers are beginning to realise that there are no bargains to be found in the Sydney property market right now, many are also realising that the properties they purchase today are likely to look like bargains in 12 months’ time. But this won’t be a case of ‘everyone’s a winner’. Careful property selection is critical if you are to realise the potential market growth.

Our advice? Stay away from the following under-performers:

  • High-rise towers

  • Off-the-plan apartments

  • Poor quality units by disreputable builders

  • Established houses in new housing estates

  • Properties in particularly blue-collar areas (although there are certainly winners to be found here too)

A fun couple of weeks at Treak

The property market is complex and ever-changing. It can be hard to keep track of it all alongside work and family life. Happily we can do that for you!

At Treak we deal in Sydney property all day, every day, and are passionate about matching buyers with their dream homes. If you’re looking for expert advice on the state of the market, and where you should be searching for your next property given your particular wants, needs and circumstances, we’d love to pass our knowledge on!

Over the last two months we have been busy buying properties for several clients. We just secured a lovely two-bedroom apartment in Redfern off-market for our clients Annabelle and Lewis, which settled last week. We also rented our last three properties in a single week at premium rents to wonderful tenants, delighting our landlords.

Ready to make the most of what could be unprecedented gains in the Sydney market? Get in touch today, or simply hit reply.

I look forward to chatting soon!

Renae Treak

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