Global Property Perspectives During COVID-19

COVID-19 has changed the dynamic of Sydney’s property market over 2020.

But how do we compare to other cities around the world?

It should come as no surprise that COVID-19 has been the defining influence on Sydney’s property market over 2020 but how does our experience compare with other cities around the world?

How Sydney property has fared during COVID-19

At the start of 2020, we were extremely optimistic about the prospects for the Sydney property market. In fact, we forecast there would be increasing stock, growing confidence, a newfound interest in apartment living and a return of investors to the market.

If you had been able to pause the market in mid-March, everything we said would have seemed thoroughly accurate. Then of course, COVID-19 intervened and turned the Sydney property market on its head.

Instead of growing stock levels, we saw listings dry up. In early May, the number of residential properties for sale across Australia fell to an all-time low. The strong growth we saw at the start of the year, where the three months to 31 March 2020 delivered close to a 4% increase in Sydney property prices, started to slow and then reverse. Meanwhile, vacancy rates rose (especially in inner-city areas), rents started to fall and investors began keeping clear of the market.

But it hasn’t all been grim news. Actually, in many ways COVID-19 has shown the resilience of Sydney’s property market. Although prices have come down from their peaks early this year, they haven’t fallen far. At the start of November 2020, prices were still up 6.1% on 12 months ago. What’s more, government incentives and low interest rates have brought first home buyers back into the market. And, at the premium end, we’ve seen some incredibly strong sales.

Melbourne

While our market has been flat, it's a different story south of the Murray River. Melbourne property prices have taken a real hit from the pandemic. The southern capital was Australia’s best performing metropolitan property market over 2019 and 2020 began strongly too. But prices in Melbourne have fallen -2.2% over the past quarter and are now more or less the same as they were 12 months ago - largely the result of one of the world’s longest lockdowns.

But there is some good news for Melbourne. One study has shown that lockdowns tend to cause prices to fall but that they also rebound quickly. This doesn’t mean that they take off again, more that the market returns to normal and resumes where it left off. After all, a lockdown means people find it difficult to search for or buy property but many are still looking to move and do so as soon as restrictions ease.

New York

Just as New York City has hit hard by the pandemic, its property market has suffered too. The NY Times reported that one-in-five tenants stopped paying rent during COVID-19 and that the average Manhattan rent fell below US$3,000/month for the first time in almost a decade.

Meanwhile, Forbes.com reports that the average sales price on a Manhattan condo or apartment fell -24.3% in the year to 1 September 2020 and that closed sales have fallen -37%.

Los Angeles

Interestingly, the situation in Los Angeles has been quite different from New York. Prices in LA county rose 14.4% from a year ago, according to CoreLogic data reported by the LA Times.

Just like Sydney, LA is currently plagued by low stock levels and this is helping keep prices high. However, with California now implementing new restrictions to slow the spread of COVID-19, the price of growth may slow too.

London

Fearing a property price crash, the UK government waived stamp duty on all sales below £500,000 (A$910,00) and then introduced a sliding scale for other properties. It also brought in easier credit for first home buyers. These measures, and the pent up demand of lockdown, seems to have had its effect.

Prices across the UK are at record highs, rising at an annual rate of 5.8% in October 2020. Between May and August the average London home price lifted £17,000 ($31,000).

But with the virus back and unemployment likely to rise, some are skeptical about whether these price gains will hold.

Tokyo

In Japan, transactions have fallen to record lows but prices in the residential property market have remained stable thanks, in no small part, to low stock levels. Again, this could change if there are mass layoffs and greater unemployment.

The state of world property

In short, the Sydney property market has held up relatively well. But so too have many other markets around the world. What happens over the next 12 months will depend in large part on how quickly our economic recovery happens and how well we can minimise unemployment.

Want more?

If you’re thinking about buying or selling property in the Eastern Suburbs, don’t hesitate to get in touch with our team today.

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