PROPERTY UPDATE- DECEMBER 2020
No matter what has happened in 2020,
your resilience and patience means it has to be better in 2021.
And market indicators suggest that house prices and employment rates will get better in 2021.
Market Update December 2020
Despite the Covid related downturn in prices in April 2020, and some forecasting upto a 30% price drop by the end of 2020, we are seeing a strong recovery in home prices.
The strong government action (on a federal and state level) avoided a housing crash, and this coupled with low mortgage rates, provided a stimulus to the market.
The landscape of the housing market in NSW has shifted considerably over the past three months. We have seen a definite trend towards it becoming a strong seller's market.
Only three months ago, homebuyers in Sydney had significant leverage over seller's who were struggling with the prospect of asset value dropping in light of COVID-19. Seller's were divided between those that sought to 'cash in' before buyer confidence depleted completely, and others who decided to maintain their position.
However, in the penultimate two months of the year, we have seen a sharp increase in prices and auction clearance rates across the board. House prices across all capital cities have increased significantly, with the highest peak coming from Canberra which saw a surge of 6.8% from the 12 months prior to November 2020. The table below gives a clear indication of the shift towards a seller's market
HOUSE PRICES 12 months to 22 Nov 2020
In Sydney, the top-performing suburbs for homes were:
Suburb Median Price % Change 2020
Belfield $1,202,500 34.4%
Bexley $1,130,000 32.0%
Bayview $1,851,000 27.7%
Petersham $1,593,043 27.4%
The increase in house prices has yet to be felt in the unit market. Unit prices have fallen all over the country mainly due to lack of overseas students and Airbnb tourists.
This was first noticed from the end of March where rental vacancy rates started skyrocketing in the Sydney CBD (to above 10%) and in the inner city area.
The increased vacancy rates then moved to the outer rings to areas such as the Blue Mountains and the Central Coast. It still remains that investors buying apartments with the intention to lease them are taking high risk with both equity and cash flow, specifically in heavily supplied areas.
Prospects for 2021
A significant catalyst for the now-surging market has been the lack of stock combined with low interest rates. We expect that to continue to be the driving force in 2021. However, as the government aims to pass softer lending restrictions on the Banks from early 2021, we expect that trend to be bolstered even further. There is certainly a feeling among lenders that accessing finance will be an easier proposition for buyers in 2021.
As a result of these factors, NSW is forecasted to experience strong price increases in the range of 8% to 12% in 2021.
Cumberland Realty Group wishes you a safe and successful 2021, which is shaping to be a year with a favourable horizon.