How did property markets perform in July across Sydney and regional NSW? Covid-19 has undoubtedly impacted the residential property market since March this year, but the price falls that some pundits and economists forecasted have - so far, not materialised.
Forecasters had also predicted that the economic impact of Covid-19 would see the economy plummet by 10%, but this has now been revised by Treasurer Frydenberg down to a more realistic 3.75%.
With so much uncertainty, and speculation in the media and on social channels, we feel there's a need to focus on the most current data (and facts), so you can use these to help inform your property decisions moving forward.
Impacts will vary from postcode to postcode
In the first instance you should avoid being too swayed by national indices and be mindful they aren't a good reflection of what's happening in each individual suburb. Any large city or metro market will have many different markets based on location, price and property type.
A case in point is national housing values which dropped -0.6% over July, while Canberra dwellings advanced +0.6% over the same timeframe. The reality is that some areas will over-perform, some will under-perform and others will remain flat. You need to get granular with data and values relevant to your postcode or suburb, so you can identify trends and track performance in your area.
You really need to get granular with data and values relevant to your postcode or suburb, so you can identify trends and track performance in your area
If you do happen to be selling a property in an area where prices are holding, the advice we are receiving from agents and industry experts is that properties that are presented well and priced competitively get early momentum in a campaign and ultimately achieve a good result. So it’s definitely not all doom and gloom at this stage.
Let’s now look at the Sydney market and analyse what has happened over the month.
Here’s what’s happening in the Sydney property market
According to CoreLogic, residential dwellings dropped -0.9% overall in Sydney over July, the largest month-on-month falls across the capital cities. This takes values in the city down -2.1% for the quarter for a median property value of $866,110. Dwelling values in Sydney are still positive +12.1% for the year to date, and currently have a median value of $866,110.
Overall dwelling values in Sydney are still positive +12.1% for the YTD, and currently have a median value of $866,110
Values are falling fastest in the upper quartile which are down -2.5% over the past four months. This is consistent with other capital cities, which are down -2.9% overall. Contrast this with lower quartile values which are virtually flat, down just - 0.1% over the same timeframe.
If you break it down and look at houses vs units, houses are down marginally over the month -0.1% (median $1,002,107), while units have fallen -0.7% (median $747,238). Houses are down -2.4% for the quarter, but are still positive +2.2% for the year, while units are -1.4% for the quarter and 2.1% for the YTD.
Here’s what’s happening in the regional NSW property market
In contrast regional markets in NSW are firmly in the black, up 0.5% over July for a median property value of $468,220. This brings them up +0.7% for the quarter and +2.9% for the year to date. According to Domain’s most recent House Price Report, property prices across much of regional Australia are growing, despite the coronavirus-induced recession.
Regional markets in NSW are firmly in the black, up 0.5% over July, +0.7% for the quarter and +2.9% for the YTD
Our recent Covid-19 market activity update identified a number of areas of regional areas with 5-6 weeks of consecutive sales volume increases, including the Southern Highlands, Central Coast, Mid North Coast, Shoalhaven and Sutherland. Areas where properties are selling faster - than the average regional days on market figure - include Wollongong & Illawarra, the Newcastle Region and Central Coast.
As you can see there are regions posting positive activity, despite the overall disruption and sentiment in the market.
Sydney and NSW rental market update
In terms of the rental market we are firmly in a renters market, with tenants prioritising affordability above all else.
The REINSW Vacancy Rate Survey for June indicates vacancies across the inner city rising, ‘...for the fourth consecutive month and now sit at 4.5%, up 0.4% from May and 1.5% since March’. Besides the impact of job losses and closure of international borders, the long-term rental market in Sydney has also been flooded with Airbnb properties transitioning away from short term lets.
The long-term rental market in Sydney has also been flooded with Airbnb properties transitioning away from short term lets
REINSW also reported that some of NSW’s larger regions experienced a vacancy rate drop in June. In the Hunter for example, rates were 1.8%, down from 2.4% in May. In the Illawarra, the vacancy rate was 3.1%, down from 3.6% just a month before.
Some other NSW regions posting vacancy rate improvements include Albury, the Central Coast, Central West, Murrumbidgee, Mid-North Coast and the Riverina. Some areas of the state weren’t so lucky, with the Northern Rivers posting an increase of 0.8%.
Corelogic data indicates that Sydney house rents have dropped -1.1% over the July quarter, while units are down -3.2% for this timeframe. Rental yields over the month of July in Sydney were 2.7% for houses and 3.4% for units.
Rent.com.au believes that overall, “...a fall in median rents is likely across Australia”, and sees government assistance as crucial in determining the medium term economic impact on the sector.
What does this mean for the property market and what can you expect in the future?
Industry insiders BresicWhitney believe COVID has altered market behaviour across Sydney significantly, noting that activity now occurs in bursts when there is a rise in consumer confidence. In terms of what we can expect in the near future, they also believe that in certain markets, seasonality is no longer a factor, and people will instead be transacting when they can.
CoreLogic reports that real estate agent activity - which is, ‘highly correlated with the number
of new listings coming on the market’, has recovered to the same levels as this time last year. This activity had dropped some 60% between mid-March and Easter, at the height of initial lockdown. Depending on the progression of the virus, this is likely to vary locally - contracting where local movement and interaction is restricted due to public health measures.
CoreLogic’s Head of Research, Tim Lawless believes, ‘...housing markets have weathered the COVID storm much better than originally anticipated’, pointing out that the, ‘...decline in home values has been orderly, with only modest reductions in most areas’.
If you are thinking of selling, take the time to research your local market and speak to agents to find out what’s happening on the ground. As we mentioned above, property performance varies widely down to street level - so if your property is in an area that’s still seeing a lot of interest, you could still get a good result while overall stock levels are still relatively low. You could also speak to an experienced local agent for an insider's view on current market conditions.