Sydney Median Dwelling Value +2.6% in June to $994,298 Houses +3.0% to $1,224,613; Units +1.6% to $794,193
- MONTH-ON-MONTH DECELERATION AFTER HISTORIC YEAR-TO-DATE +15.4% SURGE
- ELEVATED SALES VOLUMES AND NEW LISTINGS STILL NOT MEETING RECORD DEMAND
- CLEARANCE RATES MODERATING (JUNE 5 – JULY 3: 74%, 70%, 77%, 81%, 71%)
- RBA GOVERNOR PHILIP LOWE WARNS OF POSSIBLE RATE RISES BEFORE 2024
(CoreLogic and REIA figures. Chart Source: RBA 2021)
Sydney’s June 2021 median dwelling value fell just shy of the historic million-dollar mark as lockdown measures took effect towards month-end. Market momentum remained strong, with Sydney median house prices increasing more than $1000 per DAY to $1,224,613. Units continued their recovery from 2020 lows to register a welcome 1.6% increase month-on-month to $794,193. Year-to-date, Sydney houses are up a staggering +18.5% and units +8.2%.
Rental rates also improved in June, with Sydney house rents rising 5.9% year-on-year. Unit rents continued their 2021 recovery to bring the 2020-21 annual change to only -1.1%, up significantly from the -5.7% low for the year to December 2020. Gross rental yields remained flat at 2.6%.
New listings increased as did total sales volume but both were not able to meet rampant buyer demand. Auction clearance rates remained above 70% throughout June and time on market was still under a month. Prestige properties are either sold well above reserve at auction or, anecdotally, pre-auction as increasingly frustrated bidders put in huge offers to finally secure a property in this runaway housing boom.
As expected over winter, the rolling three-month change in Sydney’s dwelling values has peaked in the upper quartile and this should follow through into the middle market and lower quartile in coming months. A period of consolidation would be welcome. The worst thing for the housing market would be a repeat of the boom and bust cycle from the late 80s and early 90s. Fortunately, the economic backdrop in 2021 is extremely favorable, with continuing low interest rates, high consumer confidence, high savings rates and low unemployment.
The RBA clarifies its commitment to record low interest rates through 2024
In a much-anticipated online speech delivered 6 July, Reserve Bank Governor Philip Lowe wisely walked back the RBA’s commitment to record low interest rates until 2024 “at the earliest.” Those last three words now have a clear caveat in the RBA’s most recent Monthly Policy Decision of July 6 2021.
Governor Lowe stated:
“I want to re-emphasise the point that the condition for an increase in the cash rate depends upon the data, not the date; it is based on inflation outcomes, not the calendar. The central scenario remains that the condition for a lift in the cash rate will not be met until 2024.”
In other words, the most likely scenario remains record low interest rates but continued CPI inflation spikes like the +3.5% increase in the June quarter may force the RBA’s hand before 2024.
Should wage inflation match the CPI in coming quarters then all bets are off. It should be emphasised that this a very low probability outcome. Coupled with tighter credit policies from lenders and Sydney’s housing market would be vulnerable to a short, sharp correction sometime before 2024.
Governor Lowe went on to list the nationwide economic tailwinds driving Australia’s property boom:
“Housing markets have continued to strengthen, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, including first-home buyers. There has also been increased borrowing by investors. Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”
The Bottom Line
The Power of V-Mark Design Premium Online Listings during Difficult Times
From a real estate professional’s perspective, necessary lockdown measures can pose a logistical challenge for open house inspections and well-attended on-site auctions.
From the buyer’s perspective, the real estate market is just as open and vibrant as ever. Buyers now have more time on their hands to research available properties online and contact agents with queries. The better the online listing, the more interest it will generate from the stay-at-home crowd.
Here at V-Mark Design, we produce the highest-quality imaging, copy writing and marketing campaigns in the city. We aim for a seamless integration of your online listing with offline inspections, auctions and sales.
Call our friendly and experienced team to see how we can help you make the most of the unique online opportunities available today.
The V-Mark Design Team