- Price growth expected for Sydney as houses experience high demand
- Units which carry higher risk have a slightly different outlook
- Sydney's high auction clearance rates are reflector of the property price expectations
Greater Sydney and regional areas of NSW are enjoying extremely strong demand for houses with double-digit growth expected in the next 12 months. The same outlook does not apply to units.
The market appetite is driven by radically low interest rates and exceptionally high consumer sentiment. Consumers in the property market nationally are being driven by a fear of missing out, which has also been a driver in Sydney.
Pete Wargent, co-founder of BuyersBuyers.cm.au confirmed that buyer sentiment has shifted very quickly.
“We’re seeing plenty of buyers who put their searches on hold in 2020 suddenly rushing back to buy. Stock levels are very low and auction markets in particular are very competitive”
Doron Peleg, CEO of Riskwise Property Research, explained; “Historically there has been a strong correlation between movements in interest rates, investor activity, and property price growth … the correlation will reassert itself this year leading to strong price growth in Sydney and regional New South Wales, especially for family-suitable properties.”
Mr Wargent’s advice for prospective buyers this year is that they need to be well organised, well researched and act decisively.
“A-grade properties in Sydney are selling quickly or with lots of competition at auction, so buyers need to prepare a game plan.”
Auction Clearance Rates
Sydney’s auction clearance rates have been a reflector of the property price expectations with the most recent auction clearance rates showing 83%.
There is however a clear distinction to be made between units and houses. The average preliminary auction clearance rates are at 84% for houses while only reaching 81% for units.
With a materially lower level of risk and an increasing preference for lifestyle, houses are perceived to be the preferred choice for both investors and occupants.
These high clearance rates in Sydney are predicted to remain at pre-pandemic levels or even higher.
Outside of the capital, regional NSW is enjoying even stronger growth and high demand. The capital growth for the last three months was 3.7% while Greater Sydney only reached 1.6%.
With the sustained ‘seachange’ and ‘treechange’ trend caused by the pandemic, areas attracting lifestyle buyers outperform the wider market.
This includes Byron Bay, the Central Coast, the Hunter Valley, Wollongong, and the NSW South Coast.
Due to the low availability of property in popular areas across NSW, high growth predicted for houses in Sydney and in lifestyle areas. However, some risk can stem from an elevated level of supply in certain areas. South West Sydney is a prime example of this with the potential addition of over 6000 houses over the next two years. Creatin an almost 6% increase in stock level. This is only considered a short term risk as no major price reductions are expected.
Units carry a very different risk profile. This is linked to the different buyer cohort likely to be interested in apartments rather than houses. Unit properties lend themselves to a younger demographic. Younger buyers and renters are more vulnerable to unemployment and this is reflected in a sharp rise in vacancy rates in Sydney.