As we start to kick up our feet, log on to our last Zoom meetings, unwrap our corporate care packages or try social distance at our Christmas Parties – it’s time to look back on the 2020 Sydney property market during one of the strangest years most of us have in recent memory.
It has been a year of devastating health and economic hardship around the world. Yet in 2020 – pockets of the Sydney property market have performed as strongly as ever.
In 2021, we’re expecting a continuation of the key drivers in today’s market – augmented by increased government spending and the hopeful end of COVID-19 restrictions.
The key drivers to the market are:
- Low interest rates
- Low housing supply
- High buyer demand
- Returning of investors to the market
- Unprecedented government spending
These factors drive prices higher overall, however, in the COVID-19 and post COVID-19 market – price growth has magnified around quality homes with outdoor and study space. Buyers are more than ever looking for housing that supports a flexible, open and family-oriented lifestyle.
In addition, the following drivers need to be considered into the new year:
- NSW stamp duty reform is in motion and could begin to take effect in 2021 – this will provide a further stimulus to the property market
- Once international borders open, expats will return. This has already started happening with expatriates using Buyers’ Agents to purchase their new homes without ever viewing them in person
- There are a lot of renovation projects underway – this is resulting in high demand for rental family homes for 6 months-2 years whilst renovations are carried out
Here’s a more detailed look at key areas of the market
There are a lot of average apartments on the market that are struggling to sell or lease. Good apartments, however, are still fetching high prices and are still desirable for tenants. For example, we recently leased a 2 bed/1 bath art deco apartment in Tamarama. We had 50 enquiries and 30 applications before the first open home. After showing the apartment once, we rented it to a fantastic tenant on a 2-year lease for $40 pw more than what we advertised it for. In order to secure the property against the competition, the tenant also offered to pay 6 months’ rent up front.
Demand is high for commercial property and yields are tight. The low interest rate environment has incentivized buyers to accept lower yields on quality properties – provided they have established tenants on long term leases. Retail/hospitality have had a tough year, but with the easing of restrictions, they are beginning to bounce back.
Return to Office
As everyone’s homes also became their workplace, we’ve seen record growing demand for lifestyle properties outside of major cities. As we look forward to 2021, many companies are now planning their transitions back to the office. I suspect that with return-to-office, the current price growth in ‘lifestyle’ areas will start to slow. Buyer focus will again be shifted back into the suburbs neighboring our business districts.
So, is now a good time to buy?
If you are looking to buy next year then the bottom line is the residential market will be competitive. I recommend getting finance approved before embarking on a property search.
Properties will trade quickly and you will have an advantage if you can move quickly.
An increasing number of buyers are appointing Buyers Agents following repeated thwarted attempts to purchase on their own. As always, buyers are better off being supported by professional advice in competitive markets.
If you would like to discuss any of the above in more detail, please do not hesitate to contact me on firstname.lastname@example.org or 0448 875 842