How Sydney property will play out in 2020
Sydney property is holding up better than expected. We can say that now. And hey, we weren’t expecting it either, as COVID-19 has hit both people, and the economy.
Research analyst Dr Nicola Powell said it best in the new Domain House Price Report:
“The outlook for the housing market is definitely more stable than the broader economy,” she said. “While prices in most capital cities have declined, the falls have been minimal to date.”
Sydney houses fell just 2% for the June quarter. And 0.9% in July.
Yet when COVID hit in March, the ASX 200 posted its biggest daily percentage fall on record, and has taken a rollercoaster ride since.
And as we ride COVID property’s own twists and turns, the market g-forces signal what’s coming for the rest of 2020. It’s almost as erratic. But not quite.
Three weeks ago BresicWhitney signed 32 new listings in a week, then 21, then 16. Momentum dwindled as Melbourne virus cases spiked. But a handful of vendors saw a window of certainty open up, and 16 more listings were signed in one day. And we jumped back to 32 that same week.
Activity now comes in bursts, but when people have the confidence to transact, the market is supportive of these moments of momentum.
Forget seasonality too. Everyone usually waits for spring to see their predictions come to fruition, but new patterns tell us 2020’s winter selling season will continue through to Christmas. Across BresicWhitney offices we sold 73 properties in June up from 59 in May, and up from 53 in June 2019.
In July we sold 78 homes compared with 44 for the same period last year.
Other new habits are playing out, including the busier school holidays this month. Prestige family homes rarely transact in these times, but this year we sold a number of Hunters Hill landmarks (one above $10 million), Balmain area sales above $3 million, Paddington residences in the high $2 millions, and a string of Inner West houses sought by young families from Newtown to Marrickville.
It forms a choppy yet consistent trajectory that transcends a normal year.
Obviously investor stock and entry-level houses are affected by COVID. But with speculators being more cautious, sub-$1.5 million homes are being sought by first-homebuyers, excited about having less competition from investors.
BresicWhitney head of sales Thomas McGlynn says the same goes for homes from $1.5 million to $3 million.
“From families to couples, there is strong confidence in this bracket, and we’re seeing a wide buyer pool still active in those blue-chip neighbourhoods.
“For anyone not financially impacted by COVID-19, they’re feeling the encouragement to make big living changes, with support out there for good selling opportunities, and the chance to trade sideways.”
When the GFC hit in August 2008, the official cash rate was 7.25%. Today it is 0.25% and that’s brought resilience to the market.
One caveat to note, is if banks tighten their lending criteria, access to funds could be limited, making it harder to get into properties, and putting the squeeze on demand. That’s one we’re watching closely.
But for now, when the opportunity comes up, people are acting. This is the new pattern for Sydney property.