Sydney’s property market has recorded its quickest turnaround in decades, with house prices rebounding almost $50,000 last quarter, new data shows.
Houses prices regained almost one-third of the value lost during the two-year downturn, Domain’s September House Price Report, released on Thursday shows, with the city’s median up 4.8 per cent to $1,079,491.
The rapid recovery — four times greater than the next strongest quarterly rebound of 1.2 per cent following the 1994 market low — has defied all price forecasts.
Domain senior research analyst Nicola Powell said the quicker-than-expected upswing could be attributed to the slight relaxation of lending standards, interest rate cuts, a post-election boost in buyer confidence and improved affordability.
“We have seen a strong rise over the quarter,” Dr Powell said. “There is momentum gaining, so I do think next quarter we’re likely to see [a return to annual price gains].”
Unit prices recovered about one fifth of their value, increasing 2.6 per cent – $17,314 – to a $694,840 median over the three months.
Annually, prices are still down – houses fell 1.6 per cent and units 5 per cent – but Dr Powell said the price spike over the quarter helped slow down the year-on-year decrease.
Sydney’s north west had the steepest quarterly rise, up 9.7 per cent – adding $110,000 to its median house price, now $1.25 million.
The city’s south and inner west suburbs also recorded strong results, with respective jumps of 7.1 and 6.9 per cent adding $75,000 and $100,000 to their medians.
Significantly, prices in the inner west have also grown annually, one of only three regions to do so. They’re up by 4 per cent in the 12 months to September.
Unit price growth was strongest on the northern beaches, with a 13 per cent rise (largely attributable to the type of apartments sold). The lower north shore, with a 5.4 per cent jump, inner west and city and eastern suburbs at 3.3 and 2.7 per cent, followed. Unit prices across all regions remained down annually, apart from the northern beaches.
Markets that fell first – and hardest – were most likely to come back first and quickest, said Ray White Sydney chief executive Jason Andrews.
With the number of properties for sale down from the same time last year, Mr Andrews said there was strong competition for good homes, which was likely to continue.
“The [market] positivity hasn’t brought an overwhelming glut of stock to market,” he said.
Dr Powell said the upper end of the market which bore the brunt of the downturn had led the recovery – and that was starting to filter down to entry-level properties. She added that house prices were outperforming units as owner-occupiers looked to capitalise on better value.
However, prices remained significantly below the mid-2017 peak, Dr Powell said, down 9.9 per cent for houses and 10.6 per cent for units. Price growth was likely to slow, she added, noting subdued income growth and affordability constraints could limit increases.
NAB chief economist Alan Oster suspected it would be two years before prices returned to their 2017 peak.
“Anecdotal evidence suggests that [price growth] may be softening slowly,” he said. “At the end of 2021 you might be getting back to that sort of level.”
Mr Oster expected house prices to increase 7.5 per cent next year and unit prices to increase 6.2 per cent. He noted houses would see a swifter recovery than units, as they were harder hit by the downturn and had more ground to regain.
In addition to the boost provided by rate cutes, looser lending, improved affordability and the election outcome, there was also foreign money coming back to Sydney, Mr Oster said.
ANZ tipped annual house price growth to be at 12 per cent per annum by mid next year, in revised forecasts released last week.
“House prices have come back strongly,” said David Plank, ANZ’s head of Australian economics. “The question is how much of it continues and also what happens to policy?”
Mr Plank believed regulators would step in to tighten credit before prices rose above peak levels, and they would not support continued, rapid price growth.
The recent rebound has prompted home owners Kasey and Matt Hughes to finally put their North Ryde family home on the market.
“We were toying with the idea of a sea change for over 12 months but the market had dropped so badly that we just couldn’t. Now there has been a bit of a rise, it’s the right time,” said Mrs Hughes.
They will take their five-bedroom house with a two-bedroom granny flat to auction in just over two weeks with a price guide of $2.5 million to $2.7 million. While they feel they could miss an opportunity for further price growth, the timing is right for them.
“I do believe Sydney prices will kick again … especially in areas like where we are, there’s room for a lot more growth,” Mr Hughes said. “But “Our decision is not just based on money, it’s based on it being a good time for the kids to move.”
Selling agent Stefon Bertram of McGrath Ryde said while the market was far from boom-time conditions, quality properties were selling well.
“There’s a lot more confidence, especially in the upper end,” Mr Bertram said, noting more prestige properties had sold in the region in the past three months than the previous financial year.
Source : Domain