Spring selling season is here.
It’s a time when we usually see a rush of listings and a flood of keen buyers looking to transact. But this is a year unlike any other. So what does the Spring property market hold in Sydney’s inner city and inner west?
The market to date
2020 got off to a really strong start for our local property market. In February, we broke the Alexandria suburb record with a sale for $3 million on Renwick Street.
Once COVID-19 hit in March, so did the uncertainty. Like many buyers and sellers we were not sure what to expect.
Confidence was the biggest issue for the market and April and May saw listings drop and buyers acting with caution. Thankfully, however, it started to become business as usual around June.
We still managed to set two new sales records for our area during the pandemic.
In July, we broke the Alexandria sales record for a two-bedroom house, when 63 Kingsclear Road sold off-market for $1.95 million. The sale represented a trend we’ve observed for off-market sales to be particularly popular and successful during the uncertainty of the pandemic.
In September, we then sold 198-200 Australia Street, Newtown for $5.8 million, breaking the suburb record for Newtown by $750,000 that had previously been set by Ben Collier, our colleague at The Agency, for the Masonic Hall conversion.
What kind of properties are selling right now?
Despite these records, we’ve noticed that the inner city property market has become less uniform over 2020 and buyers are reacting differently to individual properties. Right now, it really pays to have a unique property or a genuine point of difference.
As we enter the spring market, houses are selling well, but many people selling units are facing a slightly tougher market. This is a result of higher stock levels and lower rental returns for units.
The rental market has been more affected by COVID-19 than many other parts of the local property market, with rents either static or falling and vacancy rates rising across inner city Sydney.
For example, after beginning 2020 at 2%, the vacancy rate in Erskineville peaked at 4% in May and currently sits at 3.4%, according to SQM Research. Meanwhile, data from realestateinvestar.com.au shows the median rent for houses in Erskineville has dipped by -3.85% to $750 per week, and for units, rents have fallen -4.62% to $620 per week.
Because of this, many investors are choosing to offload their rental properties which, in turn, is affecting sales prices. Many of these investors are selling units, which means there are far more units available in the market right now and buyers have more choice.
According to realestate.com.au, prices are steady, with the median sales price in September for houses in Erskineville sitting at 1.4 million and the median price for units sitting at $900,000.
In Alexandria, houses have a median sale price of $1.51 million and units $747,500.
What are buyers doing?
Despite government grants and schemes, first home buyers in our area are reacting to the uncertainty brought about by COVID-19 with reservation. They’re taking a wait and see approach, worried about the potential for job losses and future insecurity.
Investors are also becoming more circumspect about getting into the market right now. Many want to see what happens when Jobkeeper and Jobseeker end and banks start making people who’ve frozen their mortgages make repayments once again.
However, we are seeing two demographics very active in the inner city and inner west property market right now: upsizers and downsizers.
Homeowners who have considerable equity in their properties and are unaffected by the corona-recession are using the stable market environment to upgrade from a unit to a house, or a small home to a larger property.
These upsizers tend to be motivated to act quickly because they want to sell and buy in the same market.
Downsizers are also still very active in the inner city and inner west. They are trading in bigger homes and moving to a smaller property in our area - perhaps a unit, terrace or townhouse. Many are also combining this with a tree or sea change and buying a second property on the coast or in the country.
What does the end of 2020 hold?
It's harder than ever before to predict the future. While the NSW State Government has recently extended the moratorium on rental evictions due to COVID-19, and JobKeeper and JobSeeker have been extended until March 2021, it remains to be seen what happens once these measures expire.
The reality right now is that we are still achieving good sales prices in our key areas of Alexandria and Erskineville and the surrounding suburbs. Buyers are still active and motivated, and many have been looking for a long time for the perfect property.
Contact our team today to find out more about how we can help you buy and sell in Sydney’s inner city and inner west.