06.14.2023 Property Trends

The Ripple Effect: How Major Events Impact The Eastern Suburbs Property

The Ripple Effect: How Major Events Impact The Eastern Suburbs Property

The relationship between the property market and real-world events doesn’t always go the way you might think…

When we go through a crisis or experience an economic upswing, we often expect the property market will go the same way. But what really happens? We explore how the ripple effect of three major events has impacted our local property market.

COVID-19: the boom that no one saw coming…

Perhaps no event has impacted society more than COVID-19 since the Second World War. And virtually no one predicted how it would affect the property market.

In March 2020, when the pandemic first struck our shores, the country’s economists were forecasting property market turmoil. CBA believed that in a worst-case scenario, we could be headed for a 32% price crash as part of a prolonged economic downturn. The other big banks also forecast double-digit price falls.

Instead, what we got was a short decline followed by a period of intense price growth, where Sydney’s median house price lifted by a third.

What people didn’t realise was that – with interest rates set to emergency levels and JobKeeper and other subsidies rolled out – the government and RBA’s response to the pandemic would effectively put more money in some people’s pockets rather than less. They also didn’t foresee that lockdowns and border closures would encourage people to spend that money on upgrading their homes.

But it wasn’t all great news for the property market. The lack of overseas visitors had a real impact on inner-city rentals, and many landlords found they had a period of reduced or no rent. This also meant we saw house prices rising much faster than apartment prices in 2020 and 2021.

The Global Financial Crisis (GFC)

When the world economy faltered during the GFC, it was brought down – at least at first – by the US housing market. This then infected the US and global banking system and share markets until, eventually, virtually nothing was left untouched.

In Australia, we were spared the worst of the economic turmoil and even technically avoided slipping into a recession. However, many still forecast that the GFC would mean severe losses for our housing market. And, in 2008, the housing market did turn, with the national median value falling -4.7%, according to Domain.

Still, it didn’t take long to recover. Between 2008 and 2010, the national median dwelling value rose 18.2% before rising interest rates and low wage growth intervened to reduce prices by -4.5% in 2011.

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But again, the housing market overcame this short-term blip, listing another 34.7% between 2011 and 2015. Here in Sydney, they went even higher, with the city’s house price jumping 22.8% in 2015 alone.

The 2000 Sydney Olympics

The 2000 Olympics may not have impacted the world in quite the same way as COVID or the GFC, but they sure left their mark here on our city. Never before had we seen the city change so rapidly, with the leadup spurring on a period of major infrastructure building.

The 2000 Olympics didn’t just see the revamping of the Homebush area, they also led to new motorway and rail infrastructure and even new suburbs. This created a citywide economic boom in the late 1990s.

Nationally, house prices also did well, with the median lifting 44.1% between 1995 and 2000.

If that was not enough, the post-Olympics boom surpassed it, with prices lifting an incredible 76.4% between 2000 and 2004. This was the era of government stimulus (the Howard government introduced the first homeowner grant in July 2000), easier credit and, finally, some competition among lenders (mortgage brokers started to become much more common).

To put this growth in perspective, only two suburbs in all of Australia – Point Piper and Darling Point – had a median value of over $1 million at the start of that decade. By the year 2000, this had risen to six. By 2008, the number stood at 91. And by 2022, it stood at 417.

In short…

There’s little doubt major events can have an impact on the Sydney property market. However, very often, they don’t go the way many people think. Rather than trying to time the market, you’re much better off buying or selling when it suits your lifestyle – not when you think the market will rise or fall.

If you’re thinking of buying or selling in Sydney’s eastern suburbs, get in touch