Sydney Home Values Surge +3% in May – Historic $1,000,000 Median Value Milestone Just Weeks Away
STRENGTH ACROSS ALL SECTORS WITH UPPER QUARTILE HOMES LEADING SURGE
MEDIAN HOUSE VALUE +3.5% TO $1,186,518; UNITS +1.8% TO $781,708
STRONG WEEKLY CLEARANCE RATES (MAY 15 – 29: 77%, 73%, 78%) ABSORB INCREASED LISTINGS
EASY CREDIT POLICIES PUSH HOUSING LOANS COMMITMENTS UP 100% YEAR-ON-YEAR TO $30B
Sydney’s booming housing market showed continued momentum in May. The +3% price surge pushed the median dwelling value to $970,355, just $29,645 shy of the magic $1 million mark. Leading the charge were houses, up +3.5% in May and +15.1% YTD to $1,186,518. This figure was well ahead of all other state capitals, with only Hobart breaking double figures at +11.4% YTD.
Sydney’s upper quartile once again outpaced the market, with huge crowds at inspections and record prices at auctions of premium listings throughout the month. According to CoreLogic,
Sydney’s upper quartile prices have surged +12% in only three months, while the lower quartile was up a more moderate +5.2% during the same period.
The median unit value increased a healthy +1.8% and +6.5% YTD to reach $781,708. These figures also led all state capitals despite the continuing recession in the services and overseas education sectors. The weak point continues to be inner-city high rise apartments, with more family-friendly townhouses and units showing improving clearance rates throughout 2021. At 3.2%, gross yields for units outpaced the 2.4% yield for houses.
CoreLogic reports a staggering 97% of property sectors nationwide showed price improvement during May, reflecting a powerful confluence of positive market drivers: record-low interest rates on owner-occupier and investor loans, improving economic conditions, near-record consumer confidence, and strong demand continuing to outstrip advertised supply.
The RBA keeps the target cash rate steady at a record-low 0.10%
In his June Monetary Policy Statement, Reserve Bank Governor Philip Lowe kept the target cash rate at 0.10%, and reiterated his long-held commitment to low rates until at least 2024.
The importance of stable RBA policies for the housing market cannot be overemphasized. The thinking behind maintaining low rates is to keep the balance of housing prices to household debt within the upper bound of recent readings. So far, the policy has been an unqualified success, with the household debt ratio actually falling since its peak in 2020, despite the housing price boom.
The Bottom Line – Strong Price Momentum to Continue into 2022
Private residential building approvals for detached houses spiked to a record high in May, while those for higher-density housing have doubled off the recent lows. With immigration and overseas travel set to resume in 2022, this increased housing supply could easily be absorbed by new arrivals and first-home buyers currently priced out of the runaway housing market.
The most likely outcome is continued price momentum into 2022, albeit a slower pace than the unsustainable +3% monthly surge in May. The $1 million median dwelling value should create some so-called “round number resistance” as both buyers and sellers adjust to this historic seven-figure benchmark for residential housing in Sydney.
Give Your New Listings the V-Mark Design Edge
It’s been a very busy month for Sydney’s real estate professionals. From fielding calls to handling crowds at open houses and on auction day, it’s all hands on deck at agencies throughout the city. Auction clearance rates have cooled but are still well above their 64% long-term average, indicating continued price appreciation and sales activity through the slower winter months.
On top of that, fresh listings have picked up to match the increased sales activity. CoreLogic estimates that sales activity was 37% above average for the three to June, while homes advertised for sale were 24% below average for the same period but well off the recent lows. Turnover is frantic at an average of only 25 days on market.
With so little time to maximize the return for your vendors, let V-Mark Design handle all your marketing needs. We offer rapid turnaround for any new listing without compromising quality. Speak to one of our friendly team today.