Sydney Housing Prices Up a Stunning +10.3% YTD
Strong Weekly Clearance Rates Still Averaging Above 80%
- APRIL’S +2.4% MONTHLY PRICE INCREASE LEADS ALL STATE CAPITALS
- MEDIAN DWELLING VALUE TOPS $950,000; $1,147,3251 FOR HOUSES AND $771,859 FOR UNITS
- WEEKLY CLEARANCE RATES (APRIL 3 – MAY 15) OF 85%, 81%, 85%, 83%, 81%, 78%, and 82%
- UNIT RENTS UP FOR FOURTH MONTH IN A ROW AND +2.8% YTD
(CoreLogic and REIA figures. Chart Source: RBA 2021)
For Sydney’s property market, the good news just keeps on coming. In only four months, Sydney’s 2021 dwelling value surge has hit double digits (Source: RBA, 2021). April’s +2.4% increase brings the year-to-date rise to a remarkable +10.3% seasonally adjusted. The median dwelling value now stands at $950,457, up $22,429 over March and up over $5000 per WEEK in round numbers.
Houses once again outpaced units, and prestige upper quartile homes outpaced all other quartiles. Houses increases +2.8% month-on-month to a median value of $1,147,325, while units increased +1.3% to $771,859.
In welcome news for unit owners and investors, the RBA and CoreLogic both noted a clear tightening in all sectors of Sydney’s rental market. Vacancy rates are back below 4% and advertised rents growth finally turned positive in April. As a result, Sydney’s gross rental yields remained stable at 2.7% despite the significant increase in median housing values.
The RBA ups its GDP forecast: +4.75% for 2021 and +3.5% for 2022
In his May Monetary Policy Statement, Reserve Bank Governor Philip Lowe sounded a confident note on the Australian economy, with a 2021 GDP forecast of +4.75% and +3.5% for 2022. There was no change in the target cash rate at 0.10%, and interest rates on property loans remain at historic lows.
Interest rate increases remain linked to inflation targets between 2-3% and an increase in real wages. For the moment, consumer inflation remains subdued, but the same can’t be said for producer prices and the overall housing market which is clearly benefiting from the RBA’s record low interest rates.
The Bottom Line – Price Hikes, Supply Constraints and Skilled Labour Shortages Now Impacting Housing
Record prices have finally begun to increase the supply of listed properties on the market. CoreLogic notes over 40,000 new listings nationally in April, 14% above the 5-year average. However, the high clearance rates above 80% are the clearest sign that demand still significantly exceeds supply. National median selling times reached a record-low 26 days in April, while the median discount rate of 2.7% was also a record low.
In most business cycles, this supply shortage is met through increased residential building approvals and more alterations and additions to existing buildings. Eventually housing price appreciation peaks and supply of new homes and higher-density housing eventually leads to more moderate increases or falls in home values.
So far this trend is right on track. Building approvals for detached residential dwellings are hitting new highs, while higher-density approvals have doubled from 400,000 a year ago to over 800,000 in April. In addition, the value of additions and alterations to existing properties now well exceeds $1 billion dollars, having almost doubled from the lows of 2020.
The growing problem however is a significant shortage in basic building materials and the skilled labour to complete quality builds on time and within budget. Prices for some steel products have tripled, copper has doubled and construction lumber often simply can’t be found at all. Mill closures and bushfires have created a nationwide shortage of framing pine, the basic building block for all modern residential homes.
Smaller operators are being squeezed, meaning long waiting times for simple kitchen or bathroom makeovers, extensions, and granny flats. Private new builds are now averaging 9-10 months completion time v. the previous 7-month average. A clear skills shortage is also affecting the quality of some new houses and units. This can be problematic for buyers, vendors and agents alike.
How V-Mark Design Can Help
If new builds and makeovers are more costly and taking longer than planned to reach market, it makes sense for turn-key ready established properties to command a significant premium over off-the-plan units or house and land packages in the current market.
To maximize this premium, listings of established properties should spare no expense to differentiate themselves from the competition and generate the “buzz” that can blow out reserves on auction day. In the same fashion, off-the-plan listings should present a complete rendering of the modern lifestyle on offer to show prospective buyers that the purchase will be worth the wait.
Once all the property preparation has been completed, let V-Mark Design put the ribbon on top with Sydney’s best imaging and marketing packages for your listing. We cater to your marketing needs on an individual basis, suburb by suburb and agency by agency. We understand the importance of consistent quality across all your listings over time. Let our friendly team help you maximize your sales results in this banner year for Sydney property!
The V-Mark Design Team