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Sydney property themes

06-04-21

Sydney’s property market has long been the strongest performing city market in Australia. According to data compiled

by Michael Yardley, Sydney property prices have increased more than ten-fold since 1980, which is well in excess of all

other Australian capital cities. However, more recently Sydney property prices have been weaker on a relative basis as

buyers have more focused on the smaller cities and regional areas whilst the longer term impacts of COVID-19 are being

digested. Smaller cities such as Brisbane and Perth have been the strongest performers so far in 2021 along with a

number of regional areas, whilst Sydney and Melbourne have been at the back of the pack. So the key question is: is the

recent property weakness in Sydney a buying opportunity, or the start of a longer term period of under-performance?

As a starting point, let’s look at what the leading property analysts are expecting... Most forecasters are predicting high

single digit growth for Sydney real estate in 2021:

These generally positive outlook expectations are based upon strong supply-demand fundamentals, even without the

usual demand from migrants due to COVID-19 travel restrictions. Auction clearance rates across Sydney are already

back at the 70-80% level which historically suggests there are more buyers than sellers.

And in terms of key themes to be aware of, the forecasters are generally expecting most market segments in the Sydney

market to participate on the upside apart from inner city and high-rise apartments. This high-rise end of the market is

likely to continue being impacted by the move away from population-dense living in the aftermath of COVID-19. And

the converse of this inner city slowdown is that demand for high quality space is likely to continue increasing throughout

2021 as property buyers gravitate towards lifestyle-focused property. This is likely to be reflected in particularly strong

price appreciation from high quality properties in Sydney’s inner and middle ring suburbs, as well as Sydney’s larger

regional locations such as the Central Coast, and Sydney’s beachside suburbs.

Rashed Panabig, Landen’s Director, agrees the evidence is in support of continued price appreciation in the Sydney

market:

‘The outlook for Sydney property is generally positive, but with some important themes to be aware of. Sydney is one of

those markets which always looks expensive to prospective buyers when they are considering investing. However, in

hindsight, the purchase prices paid are often bargains. All the long term structural trends remain on track for this to once

again be the case at the end of this year and beyond.