The Sydney property market is driven by supply and demand. In these uncharted waters of COVID-19, a number of nuances are impacting both: employment, vendors bunkering down, rent returns deterring investors, and owner occupiers re-inspired.

If we think about how that plays out, there are opportunities for buying.

Despite the lock-down and immediate economic issues, transacting has been positive on the front lines. We’re seeing less trading at the premium end, but Sydney’s bread-and-butter property market is showing resilience.

And with an easing of open inspection and auction restrictions starting next weekend, that’s set to continue.

While listings are down, an impressive amount of trading is happening, driven by the demographic of the inner city says BresicWhitney co-founder Shannan Whitney.

Young professionals in industries that haven’t experienced the current pressures on employment still have confidence. And the listings that did come onto the market in April were priced appropriately for the conditions.

“That struck a chord and woke people up in a positive way,” Shannan says.

“Buyers don’t often get the opportunity to buy Sydney property in a ‘discounting environment’ this is one of those rare times – people have been aware of this from early on in the pandemic.”

There is good buying to be had. And it’s already happening.

A couple of weeks ago we noted one property that sold for $5 million. That vendor thought their home was worth $6.5 million 18 months ago.

Would it have fetched the dream price? Maybe not. But whatever the circumstances, those sellers readjusted their logic to be talking with $5 million buyers. The absolute premium was no longer the aspiration.

Honing in on the Sydney’s micro markets, more of those moments reveal themselves.

The well-established markets have their moments, but as a whole, they hold steadier values. People feel secure in them from Paddington to Woollahra, Potts Point to Elizabeth Bay, Annandale to Balmain. So the best buying will be elsewhere.

The sectors that saw the biggest spike in prices during the last upswing are a good start, including any pocket of the Inner West that suddenly became a new darling when values soared.

Freestanding houses $1.5m to $2.5m

Look at this entry-level market in terms of freestanding houses in Inner Sydney, with a sensible starting point around Marrickville, Petersham, Stanmore, Lilyfield and surrounds. This freestanding house market arguably offers buyers the best value of all the inner regions: south, southeast, and west, close to the CBD.

Those markets saw rapid price rises in the last cycle, so value will start to appear faster here.

*But remember: competition will still exist in these markets because they’re more protected by employment, favoured by people with steady incomes, and directed at homeowners not investors. Stock will be tight, with a solid layer of demand. So they won’t fall in your lap.

Terrace houses $1m to $1.7m

These markets have always had a high level of rental housing that was wiped out when COVID-19 hit. Think: Newtown, Glebe, Alexandria, Erskineville, Chippendale, Redfern and Camperdown.

With less confidence from investors about the rental returns in these markets, we’d expect to see some value. It’s now a pure first home-buyer and owner-occupier market, with prices trading between 10% and 15% down on where they were in February. Young home owners are watching and ready to pounce, creating strong but cautious demand.

From young families to people buying something for their children, the first-home category is pushing on, with people seeing this as an opportunity to get in.

Apartments $600,000 to $1.5 million

From Camperdown to Ultimo, and Redfern to Darlinghurst and Potts Point, this is inner Sydney’s core entry market, made up of investing and first purchasing. From 1-bedroom and 2-bedroom apartments, new builds Art Deco classics, it spans east and west, and into the southern corridor around Alexandria.

Investors are behaving conservatively in this market, and first homebuyers are navigating the space with one layer of pressure removed, without the need to sell before buying in. Some investors are selling and taking their gains. Other are accepting losses, drops in prices, and tightening rent returns.

It’s fertile ground that doesn’t happen often in Sydney, and buyers know it.

Looking forward

Good buying is rare in Sydney. And when we remove the COVID-19 backstory to see what’s happening, people remain focused on trying to find something that delivers value.

Many commentators said prices would drop 20% or 30%. But after the first wave of price reductions, it feels like buyers don’t expect the drops to continue. They are moving quickly when they see values come down.

With the economy expected to continue with challenges, no one is predicting a spike in values once restrictions are lifted. But waiting for big price drops doesn’t seem to be a strategy either.

We’re seeing discounting. And each time it happens, a buyer in the market responds.