Buyers and sellers are asking how the pandemic and the lockdown in Sydney is having an impact on prices after a 12-month period in which values have jumped by double-digits.
Everyone wants to know whether the current buoyant mood will continue, whether we’ll witness a crash or if values will stabilise to become a new normal.
No one has the crystal ball that can answer all these questions with certainty. Even economists from respected organisations such as the Commonwealth Bank can misread the market – they predicted a catastrophic fall in prices during the first wave of the pandemic.
The opposite occurred, of course, and buyers and sellers are now legitimately concerned about where we’re heading. Is it a good time to buy? Should I put my property up for sale?
The answer to both these queries is “yes” and “yes”.
Why? Let’s talk principles. A mountain of academic research warns against trying to “time the market”. Attempting to predict when prices start moving in either direction is fraught with risks that you cannot control.
Instead, it would be best if you focused on what you can control – what’s happening in your own life.
If you’re ready to buy a new home, then don’t restrain that ambition because of a risk that may or may not exist. A similar scenario plays out for owners. If you want to sell and live elsewhere because you need to move for work, get a larger home or other lifestyle reasons, then make your move.
Right now, the data plays in your favour. Despite the Sydney lockdown and scaled-down JobKeeper-style support, the market is proving resilient.
This financial year, residential property has risen 13.5% across Australia – the steepest value acceleration since 2004 – with houses (15.6%) out-performing units (6.8%).
Here are a few data points released in mid-July from the leading industry researcher CoreLogic. You’ll see a correlation between price rises and the well-known principles of supply and demand, and time-on-market.
- Except for Melbourne (+8.7%), every mainland capital city has enjoyed double-digit growth. Sydney (16.2%) leads Adelaide (14.4%), Brisbane (14%) and Perth (10.2%).
- Again with the exception of Melbourne (+2%), every capital has fewer properties for sale than 12 months ago. This time Hobart (-41.2) leads Brisbane (-26.6%), Adelaide (-23.4%), Sydney (-16.1%) and Perth (-13.5%).
- Houses and units sell faster in Hobart (both 21 days) than anywhere else. By comparison, the speed at which Sydney houses (30 days) and units (39 days) move is on a par with Adelaide (32 and 35 days respectively). All the other capital cities are not far behind in the speed-stakes.
Here’s the takeaway from the national data: prices are firm and continue to grow. The lack of supply in the market, combined with record-low mortgage rates, continues to drive values. If you’re a buyer and want to wait til prices drop, you may be waiting a long time. Maybe forever. Make your move in your best interests, rather than trying to guess when a market trend might move in your favour.