Between the federal election, Royal Banking Commission, improved credit access and record low interest rates, it’s been a bumpy ride for the Sydney property market in 2019.
Here are our key predictions for the eastern suburbs property market in 2020.
A strong start to the year
A lot has happened in the property market in 2019, but after reaching its bottom in June, Sydney property prices are now showing some very positive signs of recovery. CoreLogic’s December Housing Market Update saw Sydney values up 2.7% in December, making an almost 7% rise in values over the last quarter. Nationally, dwelling values are back into positive annual growth territory for the first time since April 2018. The start of a new year always begins optimistically, and this is likely to be especially so in 2020 given the recent lift in the market. Many buyers are now keen to get into the market before prices continue to rise too much more.
An increase in stock
If there was one key feature of the property market in 2019 it was a lack of stock. While this could continue into 2020 to a degree, we’re optimistic that we’ll begin to see more stock coming onto the market over the course of the year. Our many industry contacts, including tradespeople, stylists and auctioneers, are reporting that they’re suddenly booking up much faster than they have been, which suggests to us that more buyers are now preparing their homes for sale.
According to data from Domain’s September House Price report, Sydney’s property market has recorded its fastest rebound in decades. Alongside this, consumers are also reporting stronger levels of confidence. ME’s third Quarterly Property Sentiment Report, conducted in October, found that 42 per cent of Australians in the property market are feeling positive about the market, with almost half of those surveyed saying that they expect prices to continue to rise over the next 12 months.
Investors return to the market
A number of factors have combined to lead wary investors back into the market. These have included falling prices, the outcome of the federal election, and three consecutive interest rate cuts by the RBA, resulting in a historic low of 0.75% as of October. The lending environment has begun to relax again after the tightening of policies that followed on from the Royal Banking Commission. Some pockets of the eastern suburbs have delivered strong returns for investors through 2019, but generally rental returns are not currently at their highest. However, it’s a good time for investors to lock in capital growth with the market on the rise again.
More first home buyers in the market
New help for first home buyers, combined with falling prices, is seeing a surge in first home buyers entering the Sydney property market, hitting a six-year high of 29.8% in terms of new borrowers in August of 2019, according to CoreLogic’s latest Home Value Index. With further fiscal stimulus expected for this demographic in 2020, it’s likely we’ll see these numbers continue to grow. In the blue chip eastern suburbs we are seeing more first home buyers of a new breed: first home buyers in their early forties who are looking at properties in the $2M or $3M price range.
We’ve been seeing a lot of prestige downsizers in the eastern suburbs in 2019, and we expect this to continue to be the case in 2020. These are generally buyers who have sold the large family home and are looking for a change in lifestyle. As a result, we’re seeing strong demand for house-style open-plan apartments that offer easy access, low maintenance and good transport links.
A strong luxury home market
Sydney is still Australia’s top luxury market, with the premium property market expected to grow by 4 per cent in 2020 according to the Knight Frank Prime Global Forecast 2020, which also ranked the city the 30th worldwide for high-end real estate. The prestige property market in the eastern suburbs ended the year on a high note after a slower start to the year than usual. We expect the confidence gained over the last quarter to continue with a strong market for properties in the $20M+ price range.
Apartments are the new family home
In recent years we’ve seen a huge increase in the demand for large (3+ bedrooms) apartments. In part this trend is driven by downsizers, but for others apartments are the new family home. We see a new breed of downsizer: the traditional family unit comprising of parents with younger or teenage kids, who are downsizing to gain convenience and a better lifestyle.
If you’re looking to buy or sell in Sydney’s eastern suburbs contact my team today.
Sydney’s Eastern Suburbs Market Snapshot
A detailed annual assessment of the property market focusing on the Eastern Suburbs of Sydney, Australia.