Sydney’s property market proved its resilience last year. Despite lockdowns and Australia’s first recession in 30 years, property prices only dipped slightly before rebounding.
By the end of the year, the median price was just over $870,000 – up 2.7% on December 2019’s values, according to CoreLogic.
But that’s only half the story.
Sydney’s rebound started gaining pace in late 2020. So, while the median price may have ‘only’ risen 2.7% over the year, it jumped 1.3% in the final quarter and 0.7% in the final month.
What’s more, SQM Research (one of Australia’s most respected research houses) is now tipping Sydney’s prices to rise by up to 11% in 2021.
And SQM Research isn’t the only one making bullish forecasts.
Big four bank ANZ expects the city’s prices to rise by 8.8% while national buyer’s agency and property research firm Propertyology is expecting 2021 to be a “once in a generation property boom”. They earmarked Sydney for between 5% and 10% house price growth.
What’s driving this momentum?
Interest rates have never been this low
Following not one but three cuts to the official cash rate in 2020, home loan rates dropped to all-time lows – with some even starting with a ‘1’.
And rates are going to stay at these historic levels for the foreseeable future. The Reserve Bank of Australia’s (RBA) board has said they do not expect to increase official interest rates “for at least three years“.
Ultra-low rates mean it’s never been cheaper to service a mortgage – luring people into the market. And the data backs this up. According to the most recent home loans data from the Australian Bureau of Statistics, November 2020 saw the value of new home loan commitments hit record highs.
Government incentives are fuelling demand
Adding further fuel to the fire are government first home buyer incentives.
There’s the federal government’s First Home Loan Deposit Scheme – under which eligible first home buyers can purchase a new home with a deposit of as little as 5%, and without having to pay lender’s mortgage insurance (LMI).
On top of this, stamp duty for first home buyers in Sydney has been temporarily waived on new properties worth up to $800,000, with concessions granted for homes between $800,000 and $1 million.
Combine these incentives with the ultra-low interest rates on offer and it’s no wonder first home buyers are back with a vengeance – with numbers hitting an 11-year high.
More competition for limited stock
More buyers around means more competition for homes, helping to push up prices. To make matters worse, there’s a shortage of stock. Property listings in December 2020 fell by 18.3% month-on-month in Sydney.
Thinking of buying in 2021?
If you’re thinking of buying a property this year, it’s probably a good idea to act sooner rather than later.
Because, if prices do, indeed, rise by 11% in 2021, a property that cost you $800,000 at the start of the year will cost you $888,000 at the end of the year.
As you can see, delaying could be very costly indeed.
If you are thinking about buying, the sooner you visit a 1st Street mortgage broker to get your finance sorted, the better.
1st Street is proud to be Mortgage Professional Australia’s number one brokerage in the country for 2020. So we’re sure we can get you the very best home loan!