Thinking of buying in Sydney’s inner city, eastern suburbs or beaches in 2021?
Here are five trends you need to know about.
1. COVID-19 didn’t have the impact many thought it might in 2020
Sydney’s inner city and eastern suburbs property markets started 2020 with a bang. Then, of course, COVID-19 came along and put a damper on things. Lockdowns and social distancing became the order of the day. Borders were closed and businesses told to stop trading. Open homes and live auctions were temporarily banned. It should have been enough to kill the local property market. But it didn’t.
Instead of collapsing, prices actually rose. According to realestate.com.au data, the median apartment price in Potts Point in December 2020 is now $790,000 – 8.6% higher than at the start of the year.
It was the same story on the beaches. In Bronte, apartment prices rose an impressive 15.3% to $1,257,500, while houses lifted 5.8% to $3.4 million.
Auction clearance rates are rising too. On 9 December 2020, the Wentworth Courier reported the eastern suburbs auction clearance rate was 75% – the sign of a strong market in which prices are heading up.
If you were expecting distressed sales and bargain basement prices, they simply haven’t happened yet. You need to approach the market with that in mind.
2. Interest rates are going to be low for a while yet
The flipside of this is that interest rates are very low and will stay low for some time yet. In November, the RBA cut the official cash rate to 0.1%. It also said it doesn’t expect to lift the rate again for at least three years.
As a result, borrowing money is cheaper than it has been for some time. Even the major lenders are offering fixed rates at – or below – two per cent. So, if you’re buying with a mortgage, you don’t have to be worried about the effect a rate rise would have on your ability to repay your home loan for the next while.
3. Stamp duty is probably about to change
In November 2020, NSW Treasurer Dominic Perrottet announced the state government intended to end one of the biggest obstacles to buying a home – stamp duty. Some time in 2021, it should start to be replaced with a yearly property tax.
Buyers will have the chance to decide whether or not to opt into the new system or to pay traditional stamp duty. But given the astronomical rates we pay in NSW (a three million dollar home attracts around $150,000 stamp duty), I think I know which option most people will choose.
This should make it easier to buy, giving you more money to put towards your property and potentially also giving you more borrowing power too. The only downside as a buyer may be that it could push property prices up.
4. First home buyers are back (but not investors)
One of the few good things to have come out of 2020, is that the Commonwealth and State governments have become very serious about helping first home buyers onto the property ladder. The range of grants and schemes now on offer – from stamp duty exemptions to first home grants and deposit guarantees – makes it easier than it has been for a long time to secure your first home. When this is combined with low-interest rates, it’s now cheaper for many first home buyers to get into their first home than it is to continue renting.
This is bringing first home buyers out in numbers. In December 2020, the ABS reported the growth in first home buyer loan commitments post-COVID-19 was higher than at any time since 2009.
But first homeowners’ gains have come at the expense of landlords. With rents slumping on the back of border closures and lower population growth, fewer investors are entering the market than I can remember.
5. There are still be good buys
Despite the strong economic indicators, there are still good buys available – so long as you’re prepared to do your homework and to act fast when the right opportunity presents itself. The key to this is working with local real estate agents rather than relying only on internet searches.
Even if you do feel as though you’re stretching or paying above the odds, remember that property in our areas has always been a good long-term buy. In 2013, the median house in Darlinghurst sold for $1,050,000, according to realestate.com.au. Now it sells for $1.9 million, almost double.
The same trend has played out across most of our area. Coogee’s median house price has lifted from $1,642,500 to $2,900,000 over those same seven years. Meanwhile, in Tamarama, the median price rose from $2,090,000 in 2012 to $5,950,000 today.
The East is a premium area and I have every confidence that it will continue to grow in value over the next decade too.
If you’re looking to buy or sell in Potts Point or Sydney’s east contact my team today.