Right across Sydney, 2021 has been a year of incredible property price growth.
The median dwelling price in our city lifted 25.8% in the 12 months to 30 November, according to CoreLogic. Here in the East, many suburbs have performed better still.
We take a look at which suburbs, property types and market segments have performed strongest over 2021 and give our forecast on where the hotspots will be in 2022.
The eastern suburbs beaches register some of Sydney’s fastest rising prices
I don’t have to tell you that the past two years have been a period of unprecedented uncertainty. COVID-19 and its effects, including lockdowns and the rise of working from home, have caused many people to reconsider the way they live. And it seems many people have decided that a more relaxed life – especially one by the beach – is high on their list of priorities.
As a result, we’ve seen median prices in many beachside suburbs rise rapidly over the past year. And the more prestigious the beachside suburb, the bigger the gains.
For instance, in Bronte, the median house price has lifted more than $2 million – or 58.4% – since the start of the year, according to realestate.com.au data. In Tamarama, the median house price has risen $3.75 million – or 67%. Meanwhile, house prices in South Coogee rose $1.325 million to a median of $4 million.
A family home without leaving the city
One trend that has become apparent since the start of the pandemic is that many people in inner-city areas are looking to take a step up the property ladder without leaving their suburbs. As a result, we’ve been seeing real demand for houses, such as terraces, close to the city.
This is partly a result of the same trend affecting the beachside market – people wanting more space and a better lifestyle, but without giving up everything that’s great about inner-city Sydney. But it’s also the result of record low-interest rates, which are encouraging people to take the next step up the property ladder.
This can be seen in some incredible sales over the past year, such as 159 Victoria Street, Potts Point selling for $7 million in June and 90 Victoria Street, Potts Point which sold for $5.6 million in March.
It can also be seen in the median prices for houses in inner-city suburbs. For example, in Darlinghurst, the median price for a four-bedroom home is now $3.03 million, according to Domain.
Downsizers driving the apartment market
With demand for family homes as strong as it has ever been, we’ve also been seeing greater demand from the downsizers who are selling those homes. Downsizers tend to be cash buyers looking for a lower maintenance lifestyle that’s close to amenities. But, at the same time, they don’t want to sacrifice too much space.
As a result, larger apartments in inner-city and cosmopolitan areas have outperformed the rest of the market since the pandemic began as the table below shows.
|Suburb||Three bedroom apartment price 2019||Three bedroom apartment price 2021||Two-bedroom apartment price 2019||Two-bedroom apartment price 2021|
|Double Bay||$2.35 million||$3.35 million||$1.1 million||$1.468 million|
|Potts Point||$2.9 million/td>||$4.85 million||$1.125 million||$1.31 million|
|Darlinghurst||$4.2 million||n/a||$1.213 million||$1.638 million|
|Woolloomooloo||$2.6 million||n/a||$1.28 million||$1.375 million|
What to watch for in 2022
While the market has performed strongly this year, the prestige sector has often outperformed other market segments. That means a bigger gap than ever before has opened between apartment and house prices. This could narrow next year, with more buyers likely to come into the apartment market.
I say this because interest rates are still at record lows, the economy is coming back to life and – as I’ve pointed out before – with inner-city apartments offering strong yields, it’s becoming increasingly more cost-effective to buy rather than rent. This factor is also likely to bring investors back into the apartment market in greater numbers too – eventually driving prices up.
For that reason, I’m forecasting sustainable growth for the market next year, but I’m expecting apartments are likely to outperform houses next year. I expect those areas closest to the action will do especially well – such as Potts Point, Rushcutters Bay and Wooloomooloo – as well as apartments in more happening beachside areas, such as Bondi Beach, where apartment prices have already grown by more than 20% this year.
Best of the best in Sydney’s Eastern Suburbs over 2021
- Highest growth (houses): Tamarama – 67%
- Highest growth (apartments): Elizabeth Bay – 25.2%
- Highest median house price: Point Piper – $10 million
- Highest median apartment price: Darling Point – $2,137,500
If you’re thinking of buying or selling in 2022, contact my team today.