An honest look at where we are
The pandemic has seen a massive change in the way we live and work. Many industries that historically assumed their staff had to be in the office, have now realised it’s possible to work remotely. This is leading to a much-discussed exodus from large cities around the world.
As a result, real estate agents in rural and coastal areas of NSW are seeing a massive pick-up in demand. House prices are reflecting this. Meanwhile, the Sydney CBD is still largely deserted – and the fallout for hospitality and retail has been massive.
So what does this mean for residential Real Estate?
Low stock is the feature of the housing market – particularly in the family home bracket. In theory, we would imagine that families making a tree/sea changes would help increase supply in the prime markets of Sydney – but we are still seeing very low stock levels in these areas. Houses are selling fast. Cheap money is helping families upgrade.
We are seeing a drop in prices for poor quality apartments. For example, Bondi Beach has long been a safe bet for investors. Demand was always huge from tourists and backpackers – as well as locals wanting the famed beach lifestyle. Suddenly, demand has dried up and it’s becoming increasingly hard to sell 2nd tier apartments. The investors in these areas are dropping away. In contrast, quality properties are continuing to attract high prices.
An interesting statistic coming from REINSW shows that Central Coast residential vacancy rates have fallen from 5.1% in December 2019 to 0.7% in September 2020.
By comparison, vacancy rates in the inner-suburbs of Sydney have risen from 3.4% in December 2019 to 5.5% in September 2020. (this includes suburbs in the following LGAs: Ashfield, Botany Bay, Lane Cove, Leichhardt, Marrickville, Mosman, North Sydney, Randwick, Sydney, Waverley and Woollahra)
Outer-Sydney suburbs have seen a smaller move from 3.1% to 2.4% in the same period, suggesting that the inner city is becoming less appealing as work-from-home becomes the new norm. (This includes suburbs in the following LGAs: Baulkham Hills, Blacktown, Blue Mountains, Camden, Campbelltown, Fairfield, Gosford, Hawkesbury, Holroyd, Hornsby, Liverpool, Penrith, Pittwater, Sutherland, Warringah, Wollondilly and Wyong).
Home buying confidence is surging. The Consumer Sentiment index (housing market) shows an increase of 10.6% in September.
This puts confidence levels to its highest since September 2019.
It is somewhat confusing to see such a surge in confidence given we are in a recession and the economy has been stalled for many months.
Cheap debt and the hope of better things to come next year are inevitably fueling the surge.
We expect the trend to continue over the next few months.
With very little chance of travel this summer, it’s likely that the real estate market will be very active over the holiday period, bypassing the usual slowdown.
If you have any questions or comments, we’d love to hear from you. Get in touch at firstname.lastname@example.org
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