February 2021

This is the 31st in a series of articles summarising monthly news and happenings in Sydney real estate, and more broadly.

On the up and up

This month Core Logic reports that February 2021 contained the biggest rise in Australian property values since August 2003, with all capitals and regional areas in positive value. According to Core Logic’s research director, Tim Lawless, this is the first time a ‘synchronised’ increase has occurred for over a decade:

“The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fueled buyer demand.”

What is going on? Over the last month, every second report has been about higher than expected auction clearance results – by some considerable margin. Examples include this, this and this.

Domain reports that the northern beaches property market has snapped back to its rising popularity pre December lockdown levels – and then some. At a more nuanced level, Core Logic notes that while the value of detached housing is increasing by greater amounts than unit values, and attributes the growing discrepancy to supply and demand issues including reduced investor activity, reduced international migration and low interest rates. Other commentators such as John McGrath are more interested in people’s changing attitudes to more expensive and prestige detached properties.

In an op-ed piece for the Real Estate Conversation, he notes that since the pandemic, increased awareness of the importance of having a home with outdoor space, and even resort-style features that can improve home leisure. This particularly includes things like pools, tennis courts, waterfront positions and even boating facilities. Aside from this, the lockdowns showed the importance of having suitable work from home spaces as well as for schooling, and for vacationing at home.

Attribution: Core Logic

The New Frontier

This month Dr. Pierre Wiart, through Core Logic, discusses the ‘new frontier’ of climate hazard and risk analysis, and how phenomena like rising sea levels, erosion, bushfire, floods, supercell storms – etc – can cause a myriad of different types of losses on property values.

An excellent case in point is this article in the SMH about the new sea wall from Collaroy to Narrabeen that has recently commenced. Huge storms of 2016 and prior destroyed large swathes of the coastline, and those residents lucky (?) enough to have their properties back on to the beach now have to cough up $282,000 in order to finance the wall to save them from further destruction. Complexities aside of getting the owners of the 49 properties to agree on anything at all, UNSW coastal researcher Dr Mitchell Harley said this was effectively a bandaid solution.

“We should be learning from our past mistakes and being proactive and not building in these zones which are known to naturally fluctuate, particularly in light of climate change and sea levels rising.”

The silver lining of this construction (if it can be called such) is that the seawall design may in time be able to be used for similar coastal areas with the same sort of problems.

On the topic of collapsing structures, new powers have come into effect post the Mascot Towers, and Opal Tower fiascos, where the NSW Building Commissioner has now issued prohibition orders to the developers of 4 ongoing constructions in Sydney and Forster, forcing them to fix defects before occupation certificates will be issued. He promises there will be more to come in coming weeks.