Sydney came out on top of Australia’s capital city markets in the three months to January 2020, according to CoreLogic’s Home Value Index, recording 5.6% growth and besting Melbourne by a considerable margin. Sydney’s top-quartile market also saw values increase by 10% in the last 12 months.
This uptick has translated to stronger performance of the auction market.
“As prices in Sydney and Melbourne rose 6.2% and 6.1% respectively in the December quarter, a corresponding increase in auction market activity is expected. Vendors have been responsive to higher prices, with auction volumes up by 4.0% year-on-year,” says Eliza Owen, head of residential research at CoreLogic.
However, this means that, once again, lack of affordability is blocking those looking to buy into this city. As a result, the sluggishness experienced across the property market as the threat of COVID-19 shakes up the economy could be a welcome reprieve for buyers.
“Factoring in the seasonal effect, the latest results indicate a reduction in the speed of growth across most markets, especially for Sydney and Melbourne, where affordability constraints are once again becoming more pressing. As advertised stock levels rise over the early part of the year, we could see some further dampening of growth rates,” says CoreLogic head of research Tim Lawless.
Despite the stock boost in the first half of 2020, undersupply could become a concern once housing construction eases up later on.
“A big test for the market will be advertised supply levels – as the market moves out of the festive season slowdown, we are expecting more homeowners to take advantage of the strong selling conditions and recovery in housing prices.”
Crown Group’s director of sales Prisca Edwards notes that the Sydney market’s prospects are centred on low supply relative to demand.
“The NSW Department of Planning predicts that Greater Sydney will need around 725,000 additional homes over the next 20 years to accommodate another 1.74 million people. In Sydney, apartment values went up 4.2% in spring, and bumped up another 1.1% in January of 2020,” she says.
The population growth is driven by the local economy and the wealth of infrastructure projects, including the new international airport and the metro rail system connecting to Parramatta.
SUBURB TO WATCH:
NEWINGTON:
In Sydney’s Inner West, the suburb of Newington is home to many young families who are attracted to the neighbourhood atmosphere and schools like Newington Public School. The suburb saw a dip in average dwelling values in the three years to February 2020, but over the last 12 months it’s been a different story, with house prices soaring by nearly 30%.Unit prices did not increase at the same high rate, but they did return to positivity in the same period. By contrast, rental rates for both types of properties fell in the year to December 2019. This could be a welcome change for tenants, as existing advertised rents are $750 and $540 per week.
School: Schools like Newington Public School attract families with children
Population: Newington’s population is dominated by young families
