The inner-city property market has stayed relatively stable over the past three months despite the wider economic downturn.
We explore why that is and what to expect in the next little while.
Where the property market stands right now
While COVID-19 has affected many businesses and caused many job losses - especially in the arts and entertainment sectors our area is known for - so far its impact on property prices has been minimal. In fact, CoreLogic figures show Sydney’s median dwelling price rose 1.1% over the three months to 31 May 2020.
That takes annual growth in Sydney’s median price to an impressive 14.3%.
According to realestate.com.au, the median price for a house in Erskineville has actually risen $55,000 since April 2020 to $1.525 million. The median Erskineville unit price has been stable since March 2020 at $900,000, as has the median Alexandria unit price at $720,000.
That said, CoreLogic reports that property prices in Sydney overall fell slightly over May and were down -0.4%.
Meanwhile, the auction clearance rate for Sydney sits around 60%. However, this figure is based on many fewer auctions than we’d usually expect to see at this time of year. With social distancing restrictions only now being lifted, more sellers are opting for private listings - or even off-market sales - than normal.
Why prices remain relatively stable
Some commentators expected to see significant falls in Sydney property prices - especially in late March and early April when it seemed COVID-19 was quickly getting out of control. But so far we haven’t seen price falls of that magnitude.
We believe this is for five main reasons:
- The government’s health response meant so far Australia has contained the spread of COVID-19 so that we haven’t required the same hard lockdowns and widespread business closures parts of Europe and North America have experienced.
- The government’s economic response, in the form of JobKeeper and increases to the JobSeeker allowance, means we haven’t yet seen a substantial hit to people’s income.
- People are confident that our response to the pandemic means the Australian economy will return to some form of normal over the next few months even if some business and sectors will struggle. Consumer confidence data released in June shows Australians are now as confident in our economy as they were pre-COVID-19.
- The banks’ generous policies when it comes to allowing mortgage freezes mean few people are suffering the kind of financial distress that forces them to sell.
- Sellers are being more cautious when it comes to listing their home. This has reduced the current supply of property so that it creates competition among buyers in the market.
This situation may change, of course, if the economy fails to recover quickly enough over the next few months. For example, September looks like the final month that JobKeeper will apply. It’s also around the same time that many banks may ask affected borrowers to begin making mortgage repayments again.
However, for the moment we’re just not experiencing rapid falls in property prices around here.
Who’s buying in the inner city?
In inner-city Sydney, we’re still seeing strong demand from many buyers.
First home buyers have always been an important part of our local market. However, flat prices are combining with NSW and Commonwealth government schemes - such as transfer duty concessions and deposit guarantees - to make this an attractive time to enter the market for the first time.
The reality is that there are good buyers in the market and a lack of stock means that quality property is in high demand and selling strongly. This remains a good time to put a property on the market, especially if it can stand out from the crowd.
If you do choose to sell, remember that these market conditions make it more important than ever to choose an experienced local agent, and to conduct a comprehensive marketing campaign that showcases the property at its best.
Looking to buy or sell property in Sydney’s inner-city?
Get in touch with me today to find a property to suit your needs.