Sydney property market recovery soars to record new high
Home values are now at an all-time record high, CoreLogic revealed on Thursday, rising 5.7 per cent since October last year amid a price growth trajectory that cared little for a global pandemic and economic recession.
Sydney is now in “unchartered waters”, said CoreLogic’s head of Residential Research, Eliza Owen.
“There’s a few differences this time compared to the peak of 2017,” she said. “We’re at a record high so it’s unchartered waters but it’s also record highs in an environment where the RBA has indicated interest rates are going to stay very low for a long time – so people think these price rises will continue.
“That might be generating a sense of FOMO (fear of missing out) because buyers are worried if they don’t get in now, prices will rise even further.”
Listings were down 16 per cent this year on what CoreLogic would typically see at this time of the year, which was intensifying the competition and driving prices higher at a faster rate, she said.
What seems now to be almost unstoppable growth is typical of Sydney’s reactive market, Ms Owen said.
“Sydney tends to take on very momentous growth during an upswing but it has also had some severe downswings, and the [period] between 2017 and 2019 shows that,” she said.
“It is one of the more volatile housing markets. Compared to a city like Adelaide which is slow and steady, Sydney has a lot of wealth and a relatively high portion of investment. These aspects can contribute to a market that can be quite dramatic.”
Sydney’s 2017 peak was followed by nearly two years of consecutive declines and, by March 2019, the property market was grim: average home values had slumped by 15.3 per cent.
But by early 2020, Sydney’s market was once again on the up and well on its way to recovery. The onset of COVID was a circuit breaker, but its impact was short-lived, said Tim Lawless, CoreLogic’s executive research director.
“The recovery trend in Sydney following the minus 15.3 per cent decline from July 2017 to May 2019 was interrupted by COVID-19, with housing values falling by minus 3 per cent through the worst of the pandemic,” he said.
“Since housing values found a floor in October last year, Sydney home values have risen 5.7 per cent to reach a new record high today.
“The fresh record high is great news for Sydney home owners, but highlights the challenges for non-home owners looking to participate in the housing market as values rise faster than incomes.”
According to CoreLogic’s daily hedonic home value index, Melbourne dwelling values remain 1.3 per cent below their pre-COVID high and Perth values are still 16.9 per cent lower relative to the 2014 peak.
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Article published MAR 11, 2021 by Elle Lutton, Domain – View article here