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.