Market Report: October 2020

2020 was a year of uncertainty.

But the property market has simply not met the worst predictions, staying relatively stable since the pandemic struck. In this market wrap we look at some key indicators that show how the property market is tracking well as we end the year.

Consumer confidence rising

The defining feature of 2020 has been the uncertainty surrounding COVID-19 and its economic impact. This was reflected in declining consumer confidence at the start of the pandemic.

According to Roy Morgan, consumer confidence hit a low in April 2020 when it plummeted to its lowest level since 1991. But since then it has rebounded. By November 2020, it had almost reached pre-pandemic levels. And that’s just one measure.

The Westpac-Melbourne Institute Index of Consumer Confidence is now 13% above the average for the six months before March 2020, when COVID-19 struck.

The same survey showed NSW recorded a 9.4% increase in buying intentions. The "time to buy a dwelling" index rose 8%, to 132, which is the highest level it has been since 2013 and is 11% above the same time in 2019.

Data from the Australian Bureau of Statistics for October showed the value of new loan commitments for housing grew for the fifth consecutive month and home loan commitments for owner-occupiers have reached record highs - matching pre-GFC levels.

In line with this data, we’ve observed a shift in buyer and seller confidence in the last few months. In fact, we’re now seeing results and activity that are just as strong, if not stronger, as the Spring selling season in 2019.

Auction clearance rates show healthy gains

Corelogic auction clearance rates for the week ending 29 November 2020, show that the Inner City and Inner South had an auction clearance rate of 69.1%, and the Inner West recorded 65%.

Meanwhile, Sydney’s overall auction clearance rate was 72.5%, with 886 homes taken to auction. It was the busiest auction week since early April and the figures were very similar to the same week in 2019, which had a clearance rate of 74.6% from 843 auctions across the city.

Sales prices are increasing

We’ve achieved good sales throughout 2020 in our key areas of Alexandria and Erskineville and surrounding suburbs.

While investors may have been leaving the residential property market in Sydney’s inner ring, the great news is that there have been plenty of first home buyers and others to take their place. Owner-occupiers have been active and motivated. Many have been looking for a long time for the perfect property.

CoreLogic’s national index rose in November for the second month in a row, with dwelling values up 0.8% over the month. They’ve called it a “new recovery trend”, as it follows a 2.1% drop in Australian home values between April and September.

Looking at Sydney, the city experienced a rise of 0.4% over the month and 0.3% over the quarter. The annual rise in dwelling values in the 12 months to 30 November was 3.7%.

According to realestate.com.au, the median sales price in November for houses in Erskineville held steady at $1,387,500. The median price for units increased fractionally to $903,500.

In Alexandria, house prices have risen to a median of $1,575,000 and units have increased to $775,000.

Stand out sales

We’ve just broken another record, selling 111-113 Buckland Street, Alexandria, for $3.6 million. The price we achieved for this three-bedroom, two-bathroom warehouse conversion with parking for four cars, reflected the huge interest in these properties and their scarcity in this premium area.

It also smashes the previous record we achieved earlier this year when 10 Renwick Street, a five-bedroom/three bathroom home which is probably one of the largest properties in the Golden Triangle, sold for $3 million.

We’ve also negotiated over seven off-market sales since the new financial year. This demonstrates the trend for off-market sales to be particularly popular and successful during the uncertainty of the pandemic.

What does 2021 hold?

There are some potential headwinds ahead for the Sydney property market. The NSW State Government extended the moratorium on rental evictions due to COVID-19, and JobKeeper and JobSeeker have also been extended until March 2021 and it’s not certain what will happen once these measures expire. But weighing against these are the proposed changes to stamp duty announced in the state budget last month, which could encourage more activity in the property market generally.

If the economy and the property market continue to grow in confidence - and the COVID-19 malaise lifts - we forecast a positive outlook 2021, with prices set to rise strongly through the year.