The property market in Sydney is looking positive compared to a few weeks ago. The NSW Treasurer, Dominic Perrottet, has said that the real estate industry has adapted well to COVID-19, with virtual inspections and online auctions signalling that property buyers and sellers are still transacting despite the changes.
In recent news, the government is easing restrictions, allowing for NSW real estate agents to start conducting in-person auctions and open inspections from the 9th of May. Of course, social distancing and strict safety measures are still important. However, these changes will hopefully reignite market activity in the state.
What did April have in store for real estate in Sydney and NSW overall? We’ll go through how the coronavirus has impacted house prices, the rental market, and what we can expect in the coming months.
Here’s what’s happening in the Sydney property market
In CoreLogic’s Home Value Index, it was found that dwelling values in Sydney actually increased by 0.4% over April. For the past quarter, values are up 3.2%, and values are up +4.4% YTD. Both quarterly and YTD values are the highest of all the capital cities in Australia.
In the past, the top quartile of the property market, the most expensive properties, led the growth in dwelling values. However, in April, the top quartile had the lowest monthly rise (+0.3%) in Sydney. To compare, the broad middle of the market had a +0.6% increase in dwelling values.
In Sydney, houses in particular have had a 0.3% increase in price over April, now sitting at a median price of $1,026,418. Units have had a 0.6% increase in price over April, now sitting at a median price of $777,940.
In Sydney, houses in particular have had a 0.3% increase in price over April, now sitting at a median price of $1,026,418.
Auction volumes remain relatively low, as expected with the coronavirus restrictions and Anzac Day commemorations. In Sydney, only 269 properties went to auction last week with a 62.7% preliminary success rate reported by CoreLogic. The week before this, only 50.9% of the 192 auctions were cleared.
More positive signs for Sydney can be seen on the FrontierSI/UNSW data dashboard. It shows that clearance rates and median prices in Sydney have picked up. Furthermore, the total value of auction sales hasn’t had as much of a drop compared to some other capital cities. The flattening of the COVID-19 curve across the states can be seen as well.
Here’s what’s happening in the regional NSW market
Changes in regional NSW’s property market over April have been very similar to that of metro Sydney’s property market. Overall, dwelling values have increased by +0.4% to now sit at $469,250. Over the quarter, this equates to an increase of +1.7%, and +2.2% YTD.
To break it down, there has been a +0.4% increase in house values and a +0.6% increase in unit values over April. The median house price sits at $482,387, and the median unit price sits at $406,396. Regional NSW has the highest median house and values compared to other regional areas.
Sydney and NSW rental market update
Despite the positive changes in property prices, the same can’t be said for Sydney’s rental market in April. With the higher supply and lower demand, rents have decreased and vacancy rates have increased across most capital cities.
For April, Sydney had the second largest decrease in rent prices (-0.7%), following Hobart (-1.1%). Annual change in rents for Sydney is also down by -0.7% overall. The gross rental yield in Sydney is the lowest of all the capital cities at 2.9%. For regional NSW, the gross rental yield is 4.6%.
The rental markets in Sydney and Melbourne have been hit the worst. The declines in overseas migration and vulnerability to job loss has affected the oversupply in inner-city Sydney. Inner-city regions of Sydney have had a massive increase (+34.1%) in rental listings compared to the much lower average increase (+0.8%) for the country.
NSW Government on COVID-19 for tenants and landlords
The government has introduced new COVID-19 measures for landlords and tenants in NSW. There is now an interim 60-day stop on landlords looking to evict tenants who can’t make rent in time as a result of the coronavirus. There are six month restrictions on evictions of those that have been financially disadvantaged by COVID-19.
What does this mean and what can you expect?
The property market in Sydney and NSW has remained quite resilient over the past month despite all the changes. With real estate bans being lifted, there is a better outlook for the state’s future.
However, there has still been a decline in market activity and consumer sentiment overall. Furthermore, demand for rental property isn't expected to go back up any time soon and supply is expected to remain high. This means the rental market in Sydney likely won’t be recovering in the near future.
According to Tim Lawless, “The Australian version of this global health and economic crisis is only a month-and-a-half old, and it looks inevitable that there will be some downwards pressure on housing values over the coming months.”
“The good news is that Australia has managed to flatten the spread of the virus more effectively and efficiently than expected and we are already seeing a subtle easing of social distancing policies in some states. An early return of economic activity should support a lift in consumer spirits which in turn should see housing market activity sparking back to life.”
"An early return of economic activity should support a lift in consumer spirits which in turn should see housing market activity sparking back to life.”
We can’t know for sure when everything will go back to normal, but we do know that the Australian property market will eventually recover. This will depend on when and the extent to which restrictions and bans are lifted.
Leanne Pilkington, President of the Real Estate Institute of NSW told Elite Agent that despite some of the headlines that have been coming out, she feels property will hold firm.
“I agreed with a lot of what was said in the paper, particularly around when property was going to be hit the most. No doubt we’ll see a short term negative impact on prices, but ultimately, in 12 months time, prices are going to be more than where we’re at now.
“This is a crisis like no other and when we had the likes of the GFC, the end-point wasn’t certain. In this case, we do have an endpoint, but we don’t know how many businesses won’t come back from this,” she said.
“With interest rates at historical lows and the property market already recovering, I think it is likely that prices will continue to grow when we get on the other side.”
NSW government on COVID-19 and current situation
The NSW government understands that keeping the property market up and running is crucial. However, there are still concerns. The Treasurer, Dominic Perrottet, has urged people to stay safe and to only be viewing properties if you’re genuinely on the market for a new home.
“If we want to keep as many people in jobs as possible and businesses in business it is important to follow the safety advice and not put others at risk,” Mr Perrottet said.
“If people are not genuinely in the market for a new home, now is not the time to be having a look through their neighbour’s house.”
For daily updates on COVID-19 cases, visit NSW Government Health.