July 2020

This is the 24th in a series of articles summarising monthly news and happenings in Sydney real estate, and more broadly.

Stamp Duty Bumped

Big news this month for Sydney and NSW reported in The Real Estate Conversation, is of the bumping of stamp duty thresholds for first homebuyers looking to build their first home. If you are a first homebuyer, only a new home above $800k (up from $650k) will need to have the full stamp duty paid. Existing homes will retain the $650k threshold. For new homes, this can save over $30k on costs. 

The motivation for the change comes as part of the Government’s COVID-19 Recovery Plan.

“The current scheme has already helped over 93,000 first home buyers since July 2017 and this will give the construction industry extra support as we face the challenges of COVID-19,” said Treasurer Dominic Perrottet.

Source: NSW Government

Latest Data

This month property market analysts have begun to return some solid data around the ramifications of COVID-19. CoreLogic and ANZ released their third joint Housing Affordability report. This one was for the June quarter, 2020. In the preface to this special COVID-19 edition, Richard Yetsanga and Felicity Emmett from ANZ note that “fluctuations in the rental market will directly influence investor demand over the next few years and flow through to both prices and construction, and in turn measures of housing affordability.”

The report goes on to highlight some of the ways COVID-19 has accentuated areas of concern in the diverse demographics that make up the Australian rental market, including:

  • an examination of factors affecting rental as a direct result of COVID-19
  • the state of rental supply prior to and during COVID-19
  • the rate of investor participation up to and during the pandemic
  • a number of rental market metrics including yield rates

In regards to investor participation, Domain notes that overseas searches for Australian property have dropped in recent months with an overall reduction in searches of 5.1%. Though this seems a relatively modest figure all things considered, breaking it down further shows ‘for sale’ searches from China have fallen by a significant 27%, Singapore by 16%, and the USA by 10.5%. Apart from COVID itself, this is attributed to the reduction in available air travel, and border closures as a result of the pandemic.

It’s not all in the negative, however, as searches from Hong Kong (14.1%) the UK (6.7%) and India (4.3%) all rose.

Work from home; Live anywhere?

The ABC discusses many examples illustrating urban dwellers returning or moving to smaller towns and more rural areas. These ‘tree changes’ are becoming more accessible due to eCommerce and working from home tools becoming more intrinsic to ‘the new normal’. Similarly, Domain published a podcast that discusses the potential rise of the ‘commuter town’ (or by extension, the ‘work from home town’). The easier, or less important commuting becomes, ultimately the less need there may be for inner city lodgings.

In the podcast Greg Moran from the Grattan Institute notes that work from home rates are on the rise, but is not expecting a huge, permanent shift. He discussed that recent research claims that while 39% of jobs (@07:55) can be done from home, there will likely be a number of pressures on returning to the office after the pandemic is over. The reasons for this seemed to primarily be that business teams can work more effectively face-to-face than they can remotely. However, one can’t help but wonder what should happen to inner city house prices if technological advances made working from home even easier.