Median Dwelling Value +1.8% in August to $1,039,514 | Houses +1.9% to $1,293,450; Units +1.4% to $825,514
- CLEARANCE RATES BACK ABOVE 80% IN AUGUST (AUG 7 – SEPT 4: 81%, 83%, 85%, 82%, 86%)
- YTD AND ANNUAL RETURNS APPROACHING LEVELS NOT SEEN SINCE 1989
- RBA MAINTAINS “VERY ACCOMMODATIVE FINANCIAL CONDITIONS TO SUPPORT THE RECOVERY.” (CoreLogic and REIA figures. Chart Source: RBA 2021)
Sydney’s strong August property market results were a welcome bit of good news for city residents enduring another month of strict lockdown.
Adding to July’s historic gains, Sydney’s median dwelling value remained firmly in seven figures at $1,039,514. House price gains once again outpaced units at +1.9% and 1.4% respectively, although the gross yield for houses now sits at a record-low 2.2% versus 3% for units. This is despite another healthy increase in rents across the city, coming in at an annual rate of +8% for houses and +2.7% for units. This is in line with a national annual rent increase of 8.2%, the strongest gains since 2008.
Perhaps the most surprising property news was the auction clearance rate reaccelerating from 70% figures in July to above 80% throughout August, with many properties sold at record prices before auction. Despite the challenges of limited viewings and online auctions, housing demand continues to outstrip restricted supply across the city. Advertised stock levels remain well below long-term trends, resulting in fierce competition for any houses listed in the strongest suburbs.
Spring Selling Season Sweet Spot?
The limited supply of houses currently for sale has resulted in both the median vendor discount and median days on market coming in well below historic averages. At 30 days on market, it takes half the time to sell a home now than it did for the five years 2016-2020.
With some lockdown restrictions set to ease within weeks, sellers can lock in quick sales at record prices now before increased supply comes to market into year-end. This pent-up supply could ease the rapid rate of price appreciation over the next twelve months.
Comparisons with the surging late 1980s Sydney property market is mixed news. The ratio of housing prices to household disposable income registered a new all-time high in August. Simply put, wages are not keeping up with housing prices.
A runaway market implies reversion to the mean when things cool off. Improved housing supply and a period of consolidation in price increases would be a much better outcome than market instability from sudden excess supply from higher interest rates, as happened in the early 1990s. Worth noting is the high level of new housing loan commitments amongst both owner-occupiers and investors.
The RBA not targeting rising housing prices…yet
In his monthly policy statement on 7 September, Reserve Bank of Australia Governor Philip Lowe spoke of a “setback to the economic expansion” that “is expected to delay, but not derail, the recovery.”
Addressing the property market, Governor Lowe noted that “housing prices are continuing to rise, although turnover in some markets as declined.” RBA policy towards housing remains extremely accommodative, including extending the purchase of $4 billion a week of government securities from November through “at least” mid-February 2022.
This policy will continue to provide liquidity to the financial system and easier access to housing loans. Adjusted for inflation, real cash rates are deeply negative. Buyers sitting on house deposits are losing real money every day. The incentive to enter the property market remains as strong as ever.
The Bottom Line – Preparing for the End of Lockdown
With final full vaccination rates on track to be amongst the highest in the world, the end of lockdown is an economic certainty. The return of open houses and on-site auctions should make for an usually busy summer period for Sydney real estate.
The most cost-effective marketing campaigns will continue to be done online. Buyers and sellers alike have embraced modern marketing trend like never before. At V-Mark Design we are at the cutting edge of drone video and immersive estate videography. When the buyer can’t come to the property, we bring the property to life on their laptop, tablet or phone. Let our friendly team of real estate marketing and imaging professionals show you what’s possible with your listing.
The V-Mark Design Team