There is no question that 2021 will be a property year for the record books.
Since the start of the year, property prices have surged pretty much everywhere, with double digit growth the “norm”.
What has been most extraordinary has been that Sydney was the top performer when it came to median house value growth over the year to November.
According to CoreLogic, Sydney’s median housing value soared 30.4 per cent over the past year to hit $1.36 million.
Second-place getter was nearby Canberra on 27.2 per cent and Brisbane was third on 27.9 per cent.
Of course, this level of extreme price growth is not something that was sustainable, but rather a result of a “perfect storm” of factors during an unusual year, including not enough supply to meet the extreme levels of buyer demand.
As 2021 draws to a close, it stands to reason that buyers are wondering what market conditions might be like in Sydney next year.
The only thing I know for sure is that it is very unlikely to be a repeat of this year!
However, that doesn’t mean that the market is set to burst either, rather a moderation of conditions, which will see price growth reduce to a more sustainable level.
One of the main reasons for these more balanced conditions is more supply coming onto the market, which is a situation that appears to be already under way.
According to SQM Research, total property listings in Sydney have been trending up since September, however, they still remain below the levels of 2018 and 2019.
Another factor that may soften the price growth in Sydney is the continued outflow of people from the city to regional areas as well as interstate.
That said, with international borders set to reopen soon, the Harbour City is well-placed to, yet again, welcome the lion’s share of overseas migrants, which could turn the city’s population growth metrics upside down.
The prospect of higher interest rates as well as lending restrictions are both set to leave their market on the property sector next year, too.
The Federal Election is also due in 2022, however, housing policies appear to be finally have been taken off the political football table.
Sydney buyer opportunities
As a buyer, it is always preferable to purchase in market conditions that are not, well, insane!
That’s not to say that we didn’t purchase excellent properties at sound prices this year for our clients.
Rather, it is always hard work for everyone when emotional buyers are throwing money around willy-nilly like many did during 2021.
Next year, this craziness will hopefully continue to dissipate, which will provide more opportunities for strategic property investment purchases with more investors also active in the market.
A-Grade properties will continue to perform well in Sydney in 2022 – as they generally do in every type of market because of consistently strong demand from buyers.
There is also a significant imbalance between the price of houses and units in Sydney now, which is a situation that should see superior units in desirable locations start to increase in value.
The number of first home buyers in the Sydney market hit record highs last year when a number of grants were available for them.
However, since that time, prices have risen to such a level that it is increasingly difficult for first-timers to purchase in Sydney without help from the bank of mum and dad.
That said, the number of young people choosing to rentvest is a promising sign that prospective property owners have not given up on their dreams and are opting to purchase somewhere more affordable while remaining renting in Sydney.