R. E.
High demand led to a record jump in prices in Sydney
If the slight rise in real estate prices in Australia after the first blow of the pandemic in 2020 was unexpected, the high prices of houses and apartments in 2021 certainly caught many experts.
Ben Collier, a Sydney real estate agent, says the current state of lockdown in several states and territories “does not look like the beginning of restrictions in 2020”, when prices stagnated. This time, the market has become immune to the circumstances in which we live, as prices recovered quickly last year after the restrictions were lifted.
The growth trend is expected until the end of this year, and it is estimated that real estate in 2021 will record the highest growth, of as much as 20 percent at the national level. Only in the next year, the growth should stabilize at around seven estimates per year.
Unprecedented sales in Sydney
Despite the closure of New South Wales, which has been going on since the end of June, the results of the auctions in Sydney remained high. At the same time, the sales rate averaged 75.9 percent by the end of August, and the volume of real estate sales averaged 474 properties per week. This is the highest average weekly auction sale since 2015!
In contrast to Sydney, the situation in Melbourne is somewhat different after the sixth lock-up of this city. There, the sales rate at auctions averaged 59.4 percent. The lockout of all Australian states has led to physical auctions currently banned in Sydney and Melbourne, and buyers can only bid online. According to CoreLogic, agents have also perfected their online and telephone methods for holding auctions, which has further contributed to the increase in sales.
“However, it is difficult to separate the success of these online sales formats from the fact that demand was really high in 2021,” the REA Group, one of the leading real estate research groups, said in a report.
This claim is supported by the report of REA, which reported a drop in new real estate in the offer of 10 percent in the past month. But demand for real estate in the same period experienced a 19 percent increase over last year.
Price growth over 20%
According to the latest forecasts of ANZ Bank analysts, real estate prices are expected to reach an annual growth of as much as 24 percent in Canberra, 23 percent in Sydney and Hobart, while growth in 21 and 20 percent is expected in Brisbane and Melbourne. ANZ Bank is confident that growth will continue in early 2022, before the market begins to weaken. It is estimated that next year the growth of prices on the national level will amount to “only” 7%.
Almost identical forecasts came from the Commonwealth Bank, and Westpeck, another from the “big four” of the Australian banking sector, has similar predictions. Westpeck’s economic team predicts that national real estate prices will increase by 18% this calendar year.
Given that they increased by an incredible 25.6 percent annually in the first half of the year, the current estimate for the whole year implies a certain “cooling” in the next three months, but the value of real estate throughout the country will remain very high.
Average value – a million dollars
According to CoreLogic, the average value of real estate in Canberra reached $ 740,475 at the end of July, or 15 percent more on an annual level. In Sydney, for the first time, the average house price exceeded the seven-digit figure and amounted to – 1,017,692 dollars!
– The general picture is that prices are strengthening, but that the growth rate is slowing down – said Eliza Owen, head of the research team at CoreLogic. – The slowdown is not related to a pandemic, but is more related to limited accessibility. Although the self-confidence of the sellers has dropped during the kovid, I expect that the trend of price growth will continue until the end of the year.
Christmas boom, then slowing down
The Collier agency reckons that this year’s long closures could even accelerate sales at the end of the year. Namely, many buyers often set Christmas as the deadline for moving into a new house or apartment.
Many want to secure a home before that, so instead of waiting, they are actually looking for and making offers now, which also contributes to rising prices, it was published recently on the website of this agency.
Nine annual earnings for one house
In the coming period, a further reduction in the accessibility of real estate is expected, which will affect demand. That real estate is already difficult to access for many is also shown by the fact that in Sydney, as the most expensive city, the average value of a house is more than nine times higher than the average annual household income, which is around 115,000 dollars.
Low interest rates until 2023.
Record low interest rates affect the increased demand for real estate, but they cannot remain at the current level indefinitely. Their growth will inevitably slow down the market, and according to many analyzes, this will happen in 2023, when there will be a “slight correction of the real estate market”. It is expected that the State Reserve Bank (RBA) will raise the record low official interest rate for the first time only in 2023.
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