July 2021

This is the 36th in a series of articles summarising monthly news and happenings in Sydney real estate, and more broadly.

With such low interest rates at the moment, designed to stimulate the economy, Domain reports that increasing numbers of people are upgrading their houses. Especially following the COVID-19 lockdowns, the impetus to ensure a secure and spacious castle/resort has never been higher. The article states that this rush of upgraders has been a prime cause of sky rocketing house prices, as demand outstrips supply.

Other sides of this many sided coin would be the trudging pace of new home construction, plagued as it is by necessary red tape as mentioned last month. Yet another side might be, as reported in The Real Estate Conversation, the increasing shortage of new land, although the NSW state Government, with its recent announcement of Bradfield (Bringelly) to be the site of Sydney’s 3rd CBD, shows the direction in which Sydney is set to expand with the area currently being only slightly more suburban than agricultural in many nearby areas.

Despite (or perhaps because of) all these reasons, according to commercialrealestate.com.au, Sydney has been ranked as having the world’s highest luxury homes prices in a recently released Knight Frank 2021 forecast. To take out the dubious honour, Sydney beat out Miami and Los Angeles for forecast price growth. According to the report, this is not likely to ease up over the next few years with expected prices rises of 7% in the upper quartile of the market in 2022.

According to Domain, this quarter saw another record breaking rise in home values with both Melbourne and Canberra joining Sydney in the million-dollar-median club for the first time with respective value increases of 16.2% and 29.2%. Over the same period, Perth has become the new ‘most affordable’ capital falling behind (or: maintaining sanity over) Darwin for the first time.

According to Domain (see table), Sydney’s median price topped $1.4m at the end of June, however Core Logic puts the same national values somewhat lower (see infographic) for July.

Jun-21Mar-21Jun-20QoQYoY
Sydney$1,410,133$1,303,185$1,137,2468.2%24.0%
Melbourne$1,022,927$982,382$880,6204.1%16.2%
Brisbane$678,236$645,718$600,2585.0%13.0%
Adelaide$629,728$597,187$541,5915.4%16.3%
Canberra$1,015,833$919,900$786,51710.4%29.2%
Perth$595,823$589,687$530,7021.0%12.3%
Hobart$646,301$606,275$503,3926.6%28.4%
Darwin$608,519$559,022$497,5438.9%22.3%
National$955,927$903,471$804,3805.8%18.8%

Source: Domain

Data provided by domain

National capitals median house prices

Core Logic home value index results for July

Pointedly, a second article quotes University of Melbourne housing research fellow Kate Raynor: “It makes me really sad seeing these kinds of figures…It’s really positive if you own your own home, but the equity implications of this are really huge.”

“The people who were suffering most from the pandemic are the furthest from being able to buy a house,” she said.

“Twenty-five years ago, if you were a low-income household, you could still consider it…. If you’re living in Sydney and you don’t have wealthy parents … I think that dream is pretty dead unless you’re going 40 kilometres, 50 kilometres out of the CBD.”

However, these figures relate to detached houses. Core Logic discusses that unit prices are not rising nearly so sharply, with now a record high gap between Sydney’s houses and unit prices of 54%. However, even this pales in comparison to Darwin and Canberra’s prices gaps of 68.5% and 74.8% respectively.

In other Core Logic news, the June quarter of 2021 perhaps unsurprisingly recorded the busiest period since 2017 with 31,605 homes taken to auction nationally. While the market is still climbing, it is starting to taper off. The monthly Core Logic home value index shows that Sydney’s capital gains have fallen from 3.7% in March to 2% in July. Tim Lawless writes that “Worsening affordability is likely a key contributing factor in the slowdown here, along with the negative impact on consumer sentiment as the city moves through an extended lockdown period.”

Although it may be tapering off, 2% is still above the average for the 12 months to date, and should likely not be sneezed at (all things considered).

And the winner is Bris-bane

Congratulations go to the banana benders for winning the 2032 Olympics. Core Logic goes into what the Olympics could do for Brisbane, suggesting that now is likely a good time to start investing in particular areas such as Woolloongabba or perhaps other areas near significant sporting venues.