Buying a property in Sydney… For Millennials, it’s never really been considered ‘easy’ — especially for those who would wish to buy in the city’s more central suburbs. Despite lulls here and there, falling house prices have never fallen for very long, and it seems any dip has been more than made up for with a further increase to house prices generally. At least it feels that way.
It’s great news for sellers, who have a lot to gain from listing a home right now, but it’s hardly a blessing for anyone trying to enter the property market for the first time (around 25% of buyers).
Recent headlines surrounding Sydney property prices range from “Sydney family saved $100k but are ‘totally priced out’ of property market” to “Buyers struggle to get hold of accurate price guides in hot Sydney market“, and with the Sydney property market expected to rise another 10% by the end of 2021, (noting a 2.1% jump in February 2021 alone — the largest month-on-month increase in 17 years) we can surely expect a few more stories like these.
Especially with the most recent data from Domain revealing Australia’s city house prices have notched the steepest quarterly increase in 18 years. In Sydney right now, house prices are rising up to $1,145 a day and in Canberra, it’s $909 a day.
“There’s definitely a bit of FOMO driving prices at the moment, but at the same time, buyers who are sitting by thinking that it’s all going to slow down and they’ll wait to buy then might be waiting a while. It’s not going to slow down. The volume of properties that need to come on the market in the prime areas is just not there,” AMP chief economist, Shane Oliver, told Finder, adding: “That said, I think there will be more volume and choice in a few months’ time. But prices won’t go down.”
Experts did wonder if things would change with the end of JobKeeper; the payment scheme concluded on March 28. But according to them, the answer is no. The market is predicted to maintain its speed, and it has climbed steadily even with the end of the payment scheme. “At the height of the crisis last year, housing price drops of 10 to 20% were predicted amid fears of a fiscal cliff in September when income support measures were due to end,” writes journalist Tawar Razaghi for Domain.
“But that never happened. Instead of turning off overnight, income support measures were extended for another six months with tapered payments from October.” And according to EY Oceania chief economist, Jo Masters, the step-down in October was bigger than the ones at the end of March.
Right. So, is there any good news for buyers then? According to Finder, the property market could find natural equilibrium by 2022. That is to say, the property market is predicted to find equal footing with where it was in 2017 before lenders became stricter on home loan applicants, following the Financial Services Royal Commission.
“Our property markets have been constrained since 2017 and prices are now only the level they were in 2017 in both Melbourne and Sydney,” Metropole CEO and property advisor, Michael Yardney, told Finder.
“What we are seeing is pent-up demand from home buyers catching up for a lost few years. There is currently a supply-demand imbalance, with the strong demand not being matched by the number of new listings.”
Secondly, the fact that interest rates can’t really go any lower will mean the market should “run out of steam” as Archistar chief economist, Dr Andrew Wilson, puts it to Finder. He says borrowers “won’t have the capacity to keep going to the bank to borrow more money because we won’t have substantially lower interest rates and we certainly won’t have higher incomes”.
Taking all of that into account, should you then wait to enter the property market? According to the experts, it’s not really a matter of when is the right time to enter the property market, but when is the right time for you.
Lower interest rates and greater borrowing power is certainly appealing for first-home buyers, but if you’re not in a position financially to start the process, then fear not. Experts will agree you can never miss the boat altogether.