December 2021

This is the 41st in a series of articles summarising monthly news and happenings in Sydney real estate, and more broadly.

2021 in review

It looks like the editors at Domain have been asking their writers for 2021 summary lists and award placings for the year, as you do, at this time of year. In a veritable smorgasbord of listy goodness, we remembered many of the themes of the year.

In the TLDR version, property trends of 2021 are summarised in this final wrap up. Some of the themes include:

  • Space, and how to get more of it: more rooms, more land = exponentially more cost
  • Escalating property prices exacerbating the difference between the own and the own-not.
  • Parents gifting cash for their children’s homes rather than going guarantor
  • First home buyers washing into the market, and then washing out again
  • The value of the Australian property market broke $8 trillion for the first time, in the first half of the year
  • And broke $9 trillion in the second half
  • Steep rise in regional property values particularly anything on or near a coast

Much more in the article. Possible ramifications of these types of themes are almost beyond comprehension each one is so pertinent.

Various other articles expound most of these themes in their own way, as well as adding a few more good points, but at the end of the day, everything comes down to a single thing; that of the cost of buying a property.

How much would you expect to pay?

Adding to the proof (if we needed any) that the housing market has completely lost control, this Domain article listed some of the craziest auctions of 2021. This includes a wealth of interesting info and anecdotes. For example, how a sale had to now be literally millions of dollars over reserve to warrant surprise; hundreds of thousands over barely warranted attention. The article includes a sample list of some of the articles written during the year about residential auctions that broke records in their own right, and to top it off, it has a list of suburbs with 100% clearance rate Jan-Nov.

This year there was a renewed emphasis on parents financing their children’s homes. No longer do parents go down as a guarantor, now they just give cash. This emphasis was focussed on the rate at which family money is increasingly relied on – nay, critical – for millennials and first-time buyers to get into the market, with a ‘one graph to rule them all’ approach: that being of the ratio between wage growth and property values.

Out of the capital cities, Brisbane has taken the gong as fastest growing property market in the last quarter, perhaps partly as a result of the Olympics announcement coupled to “relatively low level of stock”, jumping 7.4%. With no surprise, Sydney takes the lead for the 12 months with an astounding/terrifying 25.8% increase, however over the last month the harbour city has risen a more modest 0.9%, with rises tapering off for some months now. For more nuance, this article lists the suburbs that jumped by more than 50% of their value.

And, of course, the awards we’ve all been waiting for / dreading, what are the top 10 most expensive suburbs in Australia? Well, wonder no more as the results are in. As expected, the competition between Sydney and Melbourne (that only people in Melbourne care about) is a one-horse race. All but one are in Sydney. Of the Sydney ones, all are in the Eastern suburbs, North Shore or Northern beaches. The Victorian contribution was Toorak in 4th place (a creditable effort).

The flipside is that these lists of stupendous value increases bring into focus the areas that have not had such stratospheric increases, and how people with different socio economic levels have been forced to respond during COVID were looked at in this SMH article which discussed “how much harder [COVID] impacted people on lower wages and in service-based industries where they couldn’t work from home.”

Blame the tree changers

The Real Estate Conversation published an interesting article by John McGrath, who has been consistently writing about the large number of tree changers since the beginning of the pandemic. Regional property values are rapidly increasing due either to renovation, tree changers, or holiday home buyers looking far and wide for opportunities.

In the same vein, Domain ran a story about the city slicker who cashed it all in, and more to a regional area for a less stressful mortgage, and how this story is increasingly a legend only. The story discusses a number of regional areas close to Sydney prices. These include Byron, Kiama, Wingecarribee, Noosa, Southern Highlands, Creswick-Daylesford-Ballan, Gippsland and Shoalhaven. Both this and the former articles appeared after Core Logic ran a story about where affordability has deteriorated most across regional areas, and are undoubtedly based on that data.

And how did the year end? According to the ABC, on a firecracker, suggesting the the market is in no way ready to cool yet.