January 2022

This is the 42nd in a series of articles summarising monthly news and happenings in Sydney real estate, and more broadly.

The boom of 2021

All the buzz this month seems to be around Sydney’s housing prices – there’s not an innovation or reform in sight.

The ABC reports that in 2021, Australian property prices had the biggest price surge since the 1980s. Of course, in context it’s important to note that a comparable percentage jump then would have been in much smaller actual dollar values. According to the article, predictions for 2022 and 2023 generally point to a flattening and perhaps even modest falls. AMP chief economist Shane Oliver is reported as writing, “We expect a further slowing in national home price gains ahead of a peak and then price falls from later this year and in 2023,”

Likewise, the ABC reports that the Sydney median house price has risen from $1,202,786 in December 2020, to $1,601,467 in December 2021, As the reporter says, this is a 33% increase for the year, which equates to an average increase of $1100 increase per day. According to the story, this is the steepest annual growth on record.

On that note, Domain asks the $64 thousand dollar question: Should you buy that investment property this year? Apart from housing value having just increased by a mammoth amount and unlikely to repeat those increases at least in the short term, other things to consider include whether interest rates are set to rise, upcoming state and federal elections, changes to loan rules in 2021 and more. Loan Market Mortgage Broker Daniel Koutsaminis is quoted as saying, “There’s still a fairly decent amount of confidence, with clients wanting to invest. The sentiment is still pretty decent, pretty strong.”

Similarly, the Real Estate Conversation drills into some specific points to consider as to whether now is a good time to buy an investment property. In a nutshell:

  • What is your financial position
  • What are the current lending requirements for investment homes, and other macroeconomic factors
  • What type of property are you interested in, and where is it
  • How will an investment impact your cashflow.

Another Domain article provides lists of the Sydney suburbs with the greatest and smallest value increases for both houses and units. According to the article, “not a single suburb recorded a decline in house values”, however there was interestingly some decline in unit values in the final quarter of 2021. With the migration to working from home, people are choosing space and proximity to favoured features rather than proximity to work and the office.In the article, Tawar Razaghi notes:

“Sydney’s median unit price of $802,255 is now half that of Sydney’s median house price of $1,601,467 – both record highs.”

Further afield, Sydney’s prices are affecting the rest of NSW as sea and tree changers move away from the big smoke. The biggest median house rises were the Snowy Mountains with 50%, closely followed by Kiama and Byron Bay by about 48%. Other strongly improving areas include Wingecarribee, Ballina, Tweed and Lismore.

Looking ahead, John McGrath anticipates a strong start to the Autumn auction season this week despite looming inflation. He lists East Coast areas he is most interested in, and have the greatest potential for house price growth.