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What can Melbourne tell us about the lockdown’s impact on Sydney’s property market?
Real Estate industry experts predict that Sydney’s lockdown will be a little more than a speed bump for a hot housing market.
With case numbers remaining stubbornly high, Sydney’s latest lockdown is at present expected to last until the end of July 2021.
While in-person auctions and traditional open houses aren’t taking place in the “Greater Sydney area” during this period, exemptions to the current COVID-19 health orders remain in place for one-on-one inspections and online auctions.
There are strong arguments on either side of the debate around whether or how these restrictions and exemptions will help or harm the level of activity and price growth within Sydney’s property market.
While a slowdown in the property sector is usually synonymous with the arrival of winter, Sydney’s housing market has been particularly hot lately.
The latest numbers from CoreLogic found that Sydney still led the pack, recording 8.2 per cent when it came to price growth over the most recent quarter. For comparison, Hobart placed second with 7.4 per cent price growth, while Melbourne trailed in second-last at 4.6 per cent.
Nationally, CoreLogic’s monthly home index recorded a 13.5 per cent growth in house prices over the last financial year.
However, according to CoreLogic’s head of research for Australia, Eliza Owen, it’s the demand side of the equation that “takes a hit” during lockdowns.
“There was a lot of uncertainty amid stage 2 restrictions nationally last year, and sentiment for housing market outcomes plummeted. But supply also declined, because sellers and agents knew it may not be the best time to market property. That helped to balance out the overall effect on prices,” she said.
Paul Ryan, an economist at the RealEstate.com.au, said that Melbourne’s 2020 lockdowns provide “a good guide to what may happen in Sydney”.
Mr Ryan revealed that housing sales are expected to fall once selling campaigns that began before the lockdown did reach their conclusion.
“Determined buyers will still be able to find properties, but available stock will dwindle as the lockdown continues,” he said.
Citing Melbourne’s lockdown in July 2020, where the number of sales per week fell to 70 per cent of pre-outbreak levels by the 11th week of the lockdown, Mr Ryan noted that “sales recovered as the outbreak was brought under control, and quickly surged to almost twice the pre-outbreak level after restrictions were lifted, making up for the slow lockdown period”.
Should Sydneysiders expect to see a similar snap back in the market following the end of this lockdown period?
Mr Ryan isn’t certain, highlighting the difference in restrictions faced by those in Melbourne versus those in Sydney. Still, he said that “the Melbourne experience suggests Sydney prices will remain high”.
According to him, “there may be a slight slowdown in Sydney prices if the lockdown continues for some time, but the effect on price won’t be lasting”.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.