As we move out of winter and catch a glimpse of spring, it is time to look back and assess how property markets performed across Sydney and regional NSW during August.
While COVID-19 and the challenges Melbourne faces in containing the virus, continue to dominate the national news cycle, it is important to keep a clear head and maintain a realistic perspective. For us here at Open Agent, that means using trustworthy insights - like property analysts CoreLogic’s data - to inform our outlook, and not news headlines.
Property is not a short-term investment
First and foremost it is important to remember that as an asset class property is not a short-term investment. To illustrate this read our recent article which identified suburbs with the highest price growth over the past 5 years. Standout performers in NSW included houses in Calderwood (Wollongong & Illawarra) which advanced +184% over 5 years for a median value of $650k, and units in Winston Hills (Parramatta) which grew +170% for a median value of $677k.
Overall August saw national property values fell -0.4%, though CoreLogic reports, ‘the rate of decline has eased over the past two months’. Values in Melbourne were partially responsible for the decline, with values dropping -1.2% in August, the largest
decline for any of the capital cities. Despite this, property commentator Michael Yardney points out that median property values are still higher today than they were a year ago across every capital city, except Perth.
Let’s now look at the Sydney market in more detail and see how property values performed over the month.
Here’s what’s happening in the Sydney property market
Sydney recorded slightly better conditions relative to July, down -0.5% for the month, which leaves it negative -2.1% for the quarter. Overall Sydney property is still positive for the year to date at +9.8% for a median property value of $860,182.
Overall Sydney property is still positive for the year to date at +9.8% for a median property value of $860,182
The median property price is the sale price of the middle home in a list of properties ranked from highest sale price to lowest over a set period of time. The drop sees the median Sydney house price drop below the $1million mark to $985,723, while units slip marginally -0.3%.
Although home values are slightly down over the month, auction activity remains strong with more properties selling at auction compared to the same time last year.
Data from CoreLogic showed that auction numbers have been steadily increasing with 730 homes taken to auctions in the week ending 30 August 2020 compared to 590 last year.
CoreLogic head of research Eliza Owen told ABC that it was surprising to see clearance rates holding steady and volumes increasing.
“For the past four weeks, the Sydney auction clearance rate has held at about 62 per cent, which seems relatively strong amid a pandemic, and weak economic conditions.” she said.
Here’s what’s happening in the regional NSW property market
Regional property values in NSW continue to show resilience and growth, with houses growing +0.4% over August to $472,011.
Regional markets offer some clear advantages to urban postcodes, being substantially more affordable, lower population densities and space to breathe - which is a distinct lifestyle advantage in this age of social distancing. The trick is to find a regional centre with the same level of access to employment opportunities and essential services as a capital city.
The latest CoreLogic Quarterly Regional Market Update reports that the Illawarra - sandwiched between Sydney and South Coast - has posted the largest rise in housing values over the past year with an increase of 12.0%. Southern Highlands and Shoalhaven come in second, with house prices increased by 12.7 per cent.
The Domain House Price Report for the June quarter identified Kiama as a growth hotspot, where median house prices have advanced +10.5% for the year to June - for a median price of $905,775.
According to the latest CoreLogic Quarterly Regional Market Update, the best performing regional market for houses is the Illwarra region - recording an annual growth rate of 12.0 per cent.
Rental market update for Sydney and regional NSW
Rents in Sydney continue to slip over August, with CoreLogic reporting that asking rents for units dropped -4.3% over the recent quarter. House rents are also down but with a much softer drop of -1.3%.
Mr Lawless says that weaker rental conditions across the unit sector can be attributed to a combination of high supply and low demand. High rise unit supply across inner city Sydney has remained substantially above average.
“At the end of March there remained around 51,000 units under construction across NSW.”
“On the demand side, rental demand for inner city apartments has been significantly impacted by stalled overseas migration, including foreign students, as well as less demand from domestic students who are generally studying from home.” he said.
According to Rent.com.au’s time on market data, units took slightly longer to lease in July 2020 at 31 days compared to 24 days for houses.
In the months ahead, CoreLogic expects weaker rental conditions to continue for units as high supply and low demand persists, especially for parts of inner city Sydney and Melbourne.
Over in our regional market, both houses and units performed well with house rents increasing +0.7% over the month and unit rents also up +1.2%.
What can we expect for the future?
It is clear that the impacts of the pandemic will continue to influence the property market as movement and economic activity continues to be limited. Regions where the number of cases has steepened - like Melbourne, are likely to feel the economic pain more acutely. For property this typically translates into reduced listings and sales activity.
Critical events to keep an eye on in the weeks and months ahead include:
The end of the moratorium on rental evictions
Reductions to government stimulus initiatives like JobKeeper and JobSeeker, even though stimulus payments have been extended into 2021
The end of repayment holidays for lenders
The Federal Budget on 6 October, which could provide an indication of any further stimulus for the housing market and broader economy
If you’re considering selling your property, take the time to research your local market and speak to agents to find out what’s happening on the ground. As we have reported, property performance varies widely down to street level - so 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.