Why Sydney’s Premium Property Market Is Still Performing Well
Despite widespread forecasts of plummeting prices due to COVID-19, Sydney’s premium property market has been performing well.
We look at what’s behind the numbers.
COVID-19 has plunged Australia into its first recession since the early 1990s, so you might expect that property prices would be falling rapidly too. However, the top end of the Sydney market has been performing strongly lately, with record sales and strong competition key features of today’s market.
We look at what’s behind current strength in the prestige market and what it means if you’re looking to buy or sell.
What’s happening in Sydney’s prestige property market?
A recent Financial Times article sang the praises of Sydney’s prestige property market, highlighting that in the September 2020 quarter there were 28 sales of more than $10 million – which is 16 more than in 2019. These impressive sales, it said, stood ‘in sharp contrast’ to the city’s prime market as a whole, in which the median price fell by -3%.
We’ve been seeing some strong prestige sales both on and off-market in our area too, with some excellent results.
We believe there are five key factors keeping prestige buyers confident, even in the face of the current recession.
1. Different factors drive the prestige market
One of the most important things to remember is that there is no single Sydney property market. There are several property markets and vene micro-markets and different factors drive prices to rise or fall at different price points.
As cash buyers are over-represented at the prestige end of the market, this sector is relatively unaffected by what’s happening when it comes to bank lending policies or interest rates. Instead, it’s driven more by things such as the health of global share markets, the value of the Australian Dollar, global economic conditions and even whether businesses are being bought and sold or taken to IPO.
We’ve been finding that one of the main impediments for buyers in other market sectors is the banks’ unwillingness to lend money to certain buyers, especially those with small deposits or in what they consider ‘high risk’ sectors. This simply isn’t an issue at the top end.
As a result, one of the main brakes on the market right now just isn’t there at the premium end.
2. A lack of stock
While there may be many prestige buyers looking for property, what’s missing from the equation is available real estate. There simply isn’t a lot of stock available. In fact, we’ve never seen listing levels so low. That’s creating strong competition for quality properties that do come on the market.
When prestige buyers have little choice, they’re willing to put their best foot forward when it comes to securing the right property. And that is putting upwards pressure on prices.
3. Sydney’s status as a safe city
While we may be feeling the effects of a corona-recession, the reality is Sydney has so far come out of this lightly. Where else in the world would you rather be right now?
As much of the world faces high transmission rates and strict lockdowns, a lot of people are looking at our city and thinking the same thing. This is especially true for expat Australians living in places like London and New York – many of whom work in the finance sector and similarly well-paid fields.
As a result, we’re seeing renewed interest from overseas buyers who want to secure a dream home in a dream city.
4. A renewed interest in home life
Speaking of which, even though Sydney hasn’t been in lockdown for some time, the pandemic has still given most of us cause to spend a lot more time at home. This has made a lot of people think about what kind of home they want to be living in.
For some, that’s meant some DIY or even a full-scale renovation. But for others, it’s leading to a move up the property ladder and into the kind of home they’d be happy to spend a lot of time in. This is driving more people into the prestige market.
5. Coming back to parity
Interestingly, when the Sydney property market went through a slump between 2018 and 2019, it was often the prestige market that suffered most. Then, in the second half of 2019, it began experiencing the strongest gains.
To some extent, what we’re seeing now is a continuation of that trend. After all, prestige buyers aren’t always impacted by the economy to the same extent as other buyers so the coronavirus pandemic hasn’t dented their enthusiasm to buy.
What this means for you…
If you’re thinking of selling a prestige property now is a very good time to do so because there is likely to be strong demand and few competitors. And, if you’re buying, it pays to act decisively.
If you’re thinking about buying or selling property in the eastern suburbs, don’t hesitate to get in touch with our team today.