January Property Market Update
Updated: Mar 3, 2021
The property market has seen strong results this January, perhaps because December was a particularly active month compared to previous years. Funnily enough, these positive results can be attributed to social distancing restrictions earlier in the year, as buyers who held off purchasing then, are very keen to do so now. In January, this has been particularly true of luxury home buyers. This month has also seen a limited supply of properties on the market due to the unprecedented amount of buyers, pushing prices higher. There has also been an influx of expats returning to Australia who are looking to secure a home.
Luxury home buyers increase investment value
Previous years indicate that real estate activity tends to slow down in late December and gets back in full swing after Australia Day due to the Christmas break and summer holidays. However, this year, it was different. Agents were making deals right up until Christmas Eve, and buyer enquiry has already started.
Domain.com.au suspects that this is due to high income home buyers ditching their usual summer holiday plans and the cost associated with them. They can now use this fund to add to their property portfolio or move to a higher value home.
Due to this new source of demand, supply is getting smaller and prices are being driven higher. In fact, the upper quartile of the Sydney market has grown 0.8% in December alone. The median house price has also grown to over $1 million in the past calendar year, indicating the sale of prestige property.
The market is experiencing high sentiment, low supply
Consumer sentiment is on a steep upward trend this January. Two in three Australians believe that now is a good time to purchase property, which is far higher than pre-pandemic levels. The Consumer Sentiment Index rose to the highest level in 10 years in December 2020, according to Westpac. This is a 48% recovery from April 2020, when the index was at its lowest.
This high sentiment has led to more active buyers snapping up property. In fact, sales volumes in Sydney increased 11.7% over 2020. However, such high sentiment is also depleting stock levels, which raises property prices. Despite an increase in new listings, total stock on the property market ended the year 20% lower than in 2019. With so many new government incentives to purchase property, now is a fantastic time to list your property due to minimal competition.
Expat buyers return home
Australia’s impressive management of COVID-19 has sparked the largest influx of returning expats that the country has ever experienced. Since March, over 400,000 expats have returned home looking to take advantage of the Australian dollar. In fact, some returning expats are so keen to secure a home that they are willing to pay as much as 20% above asking price.
As expats are often high income earners, and demand has increased, prices have been driven up in the luxury property market. Between March and June 2020, Sydney saw a 33% increase in super-prime average transaction value compared to the previous year.
43% of expats surveyed by Knight Frank want to live waterfront, and are looking to buy in the CBD, Byron Bay, Manly, Bondi and Mosman. This is great news for our sellers in the Lower North Shore, as many expats would be fantastic buyers for their properties.
This year has been kickstarted by such stellar January results. As people continue to migrate back to Australia, buyers have increased funds to spend on property, and consumer sentiment is at an all time high, projections for the year are very optimistic. When the government and banks end coronavirus benefits, the market might feel a slight dampening, but is likely to rebound immediately due to such strong market conditions. The higher end of the market is unlikely to be impacted severely.