Sydney Property Market Update, April ’21

Property management

Tempted to sell by headlines highlighting the current surge in Sydney property prices?

Dwelling values have reached record levels in many cities and regions across the country despite the recent recession, with Domain reporting that Sydney house prices have risen more than $100,000 in the first quarter of 2021.

So, is it best to list now and take advantage of this hot market, or will you get a better result later down the line?

If you are a seller you may also be wondering if it is best to list now and take advantage of the hot market conditions, or or should you hold off? 

If you are thinking of selling it is important you base your decision making on the most current data available from reputable sources. That way you can make an informed call.

This update – looking at market conditions over April 2021 – is based on key property data and metrics from industry experts, like property data analysts CoreLogic, and digital property portal Domain.

Let’s first take a look at what factors are behind this current surge and why property prices are so high? 

What’s driving the surge in Sydney dwelling values?

There are a whole range of factors that have fed the current surge in dwelling values, including:

  • Record low interest rates of 0.1 per cent, the lowest in history means borrowing is cheap – with every indication these rates are here to stay for the foreseeable future.
  • Low stock levels means buyers are competing for a relatively small pool of properties, with demand driving prices up. 
  • Government stimulus measures, including first home owner grants, the First Home Loan Deposit Scheme, stamp duty incentives and concessions have all stimulated demand.
  • An improving economy which has shrugged off last years recession driven by strong domestic demand, an improving job market and a declining unemployment rate. 

Now we’ll analyse the data and see exactly how the Sydney market performed over April.

Sydney property market: April ‘21 performance

To put Sydney’s performance in perspective it’s worth looking at the big picture first. 

CoreLogic’s national home value index recorded housing value growth of +1.8 per cent over April. This is slightly down on the 32 year high of +2.8 per cent recorded in March – so home values are on an upward trajectory nationwide. 

Sydney dwelling values rose +2.4 per cent in April, which brings the market up +8.8 per cent for the quarter and +7.5 per cent for the year to date – for a median dwelling value of $950,457. Contrast this median with other capital cities – like Melbourne ($744,679), Brisbane  ($558,295) or Perth ($513,598) and you can understand why people highlight Sydney’s affordability crisis. According to the latest Domain House Price Report, the median house price growth in the first quarter of 2021 is the fastest recorded since 1993.

Sydney dwelling values rose +2.4 per cent in April, which brings it to +8.8 per cent for the quarter and +7.5 per cent for the year to date

CoreLogic reports that auction clearance rates in Sydney have consistently been above 80 per cent since February, but these dipped just below that figure in late April. This could be the first sign of a slight cooling in the market as affordability becomes an issue.

Sydney houses vs unit performance

Looking at the distinct performance of houses vs units, detached housing continues to post stronger gains, advancing +2.8 per cent over April for a median house price of $1,147,352. 

Units grew at a slower pace, up +1.3 per cent over the month for a median value of $771,859. 

This data is based on CoreLogic’s monthly Home Value Index, which also indicates that houses posted double digit growth of +10.5 per cent over the recent quarter, with units growing at a more subdued +4.7 per cent over this timeframe. They note that the broad trend is for houses to outperform units as buyers shun higher density style housing. 

Detached housing posted stronger gains over April, advancing +2.8 per cent, while units grew at a more subdued +4.7 per cent

Sydney’s fastest growth suburbs

All Sydney regions have hit record high house prices, with some posting double digit gains over the recent quarter. Data collected by Domain indicates the following locations experienced especially robust growth over this timeframe:

LocationMedian priceQuarterly growthYear on year growth
Northern Beaches$2,400,00015.8%25.7%
Eastern Suburbs$3,147,50014.5%12.4%
Baulkham Hills $1,410,00011.9%11.9%
Inner West$2,000,0009.3%9.6%

In some locations – like the Northern Beaches – they attribute this growth spike partially to, ‘lifestyle locations where working from home became the norm for many well-heeled white collar workers’. They also point out that much of the growth in the Sydney market is, ‘at the upper end followed by the mid-point of the market’. 

What’s going on with rents in Sydney?

Rental conditions in Sydney remain challenging for landlords, especially with international migration on pause. Tenants who would have taken up residence in high density suburbs where units dominate, are simply not on the market. 

With a gross rental yield of just 2.7%, Sydney has the lowest return of all the capital cities, though CoreLogic reports that apartment rents have risen +2.8 over the recent quarter, though they are still -3.6 per cent down on the year to date. Nationally, the gross rental yield is currently 3.50 per cent, a record low.

Where to for the Sydney market from here? 

What will the coming months bring for the Sydney property market?

CoreLogic’s research director, Tim Lawless, believes that the market could slow, based on rising inventory levels and ‘affordability constraints dampening demand’. He believes the current pattern of growth is ‘unsustainable’, with ‘a gradual slowdown’ inevitable as affordability bites, moe tock comes onto the market and government stimulus tapers off.

Jo Masters, chief economist at EY agrees – pointing out that, ‘macroprudential controls could be set in motion to cool the market’, if the current growth trend continues.

Most analysts expect that property prices will continue to rise in 2021 and into 2022, though the rate of growth is likely to slow. 

Thinking of selling to take advantage of current house price growth? Then get in touch with Ash Frenken (CEO & Principal) at propper on 0409 397 173 or for a no obligation appraisal and expert advice about your circumstances.

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