Why Sydney home prices continue to ignore COVID developments
After Sydney’s recent nine-week lockdown period you’d be forgiven for thinking the property market was due a pullback, or at least a period of stable prices. Sydney’s property prices, however, have continued to climb 2% in July with further strength seen in August. Considering this follows a period of remarkably strong capital growth of 18.2% in the year to July 2021, the continued market strength is hard for some to fathom. We discuss the two main market drivers below.
Firstly, demand for property in Sydney remains strong and continues to outstrip supply, which continues to decline. The strength of demand is the most surprising market driver given the length of the most recent lockdown. Many people are perplexed by the lack of impact lockdowns are having on demand. The key development afoot is that more people are now comfortable with online auctions so property sales are still proceeding. Also, lockdowns appear to inspire some people to question whether they are living where they want to or not. By being more exposed to their home environment for a prolonged period during lockdowns it’s a logical question to ask, and it’s leading to greater market mobility.
Secondly, interest rates remain remarkably low by historic standards. As a result, many property buyers and investors are moving to secure cheap fixed interest rate mortgages at these attractive levels. This healthy mortgage demand is further supporting the already strong market in both owner-occupied and investment properties.
Landen’s Director Rashed Panabig remains positive about Sydney’s longer term property market outlook: ‘After such a strong period of capital growth we wouldn’t be surprised to see a market slowdown in the short term. We remain positive on Sydney’s long term capital growth prospects, particularly in areas with lifestyle advantages like North West Sydney. With interest rates as low as they are, and with a growing under-supply of high quality properties, we expect the Sydney property market to remain a strong performer in the coming years.’
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