What Is Driving The Property Market Right Now?
Are we experiencing a property boom?
We look at the factors that are driving the Eastern Suburbs property market in 2021.
Sydney property prices rose by 2.5% over February, as CoreLogic’s National Housing Index recorded its strongest monthly gain since 2003. And there has been some impressive price growth over the past 12 months in many of Sydney’s eastern suburbs.
But what is driving the Eastern Suburbs property market? We take a look at some trends we’re seeing right now.
A renewed emphasis on creating and finding the perfect home
You can’t talk about the current property market without acknowledging the impact of COVID-19. On one hand, the pandemic forced us into lockdown and homeschooling but on another, it has promoted flexibility and working from home and given many of us much greater work/life balance. This has led many people to see their homes in a different light.
More people than ever now see their home as an emotional investment and not just a financial one. The lifestyle, comfort, refuge and security a home offers seems to have become more important with more buyers.
As a result, we’re seeing people prepared to spend more on finding the perfect property. This is just one of many reasons why there are a lot of active buyers in the market. Low-interest rates are also encouraging people to consider making a property move. And we are also having many more conversations than normal with homeowners seeking our advice on creating the perfect property, through renovations and DIY.
Christmas did not stop the property market this year
Border closures and travel restrictions mean that no one is travelling in the same way we used to, and many people are simply not going away at all. This has a positive impact on our disposable income and household budgets. We also have an influx of ex-pats, returning home. So we have more buyers around, looking to transact.
The property market usually runs in regular cycles, driven in part by calendar events. Typically, we see the market wind down in December, and January is a time when buyers are away, and we’re preparing for February sales and auctions. However, in 2020, Christmas and the summer holidays did not stop the market like they usually do.
For example, in 2019 we didn’t sell a home until 20 February. At the beginning of 2020, pre-COVID-19, we sold our first property on 31 January. But this year stated with a bang, and over January 2021 we sold $45 million worth of property. It’s a stark change and shows that Christmas was more like a long weekend, rather than the month-long break in sales it usually causes.
We’re experiencing a property boom
Buyers far outnumber the number of properties available, which is leading to some pretty intense competition. We’ve had record numbers of buyers attending open homes, we’ve issued a lot of contracts, and we’re advising most sellers who have listed their property for auction to go ahead with the auction, rather than sell ahead of time because there’s simply so much buyer interest we feel some excellent results will be achieved.
One of the most important drivers of our local property market right now is that there simply isn’t a lot for sale.
In Sydney’s eastern suburbs, property listings are almost as low as they have ever been. These low stock levels are part of a longer-term trend, but when you combine them with the fact that there are a lot of buyers and record low-interest rates, we have all the ingredients necessary for a hot market.
Another reason we are guiding vendors towards auctions right now is that the comparable sales we use to generate price guides for properties are already out of date because the market is running so hot right now.
A case study
For example, we listed 19 Sutherland Avenue, Paddington at the beginning of 2021. A charming, 2 bedroom cottage with a side courtyard, roof terrace and a 6-metre frontage, it has a lot of potentials. We were inundated with interest from first home buyers, investors, couples looking to buy it for their children, alongside builders and developers. The property had an original price guide of $1 million but ended up selling at auction for $1,692,500 to an overseas buyer who had viewed the property by a video walk-through.
If you’d like to find out more about the state of the current market or work out a plan of attack for selling your home, get in touch with our team today.