The Sydney housing bubble – plenty of people have predicted prices to come crashing down, but not even a pandemic seems to have slowed the market. It has been one of the strongest and most consistently growing markets over the last 40 years and it doesn’t look like things are going to change much in the next 12-24 months.
So, what’s causing the current housing boom considering much of the world has been in slow down mode for the last 12 months?
It really is the perfect combination of low interest rates, a shortage of available housing and buyers wanting in the market before prices increase again. According to an article on realestate.com.au, the major banks have forecasted some pretty strong growth over the next two years, with Commonwealth predicting up to 20% while Westpac has a more modest 7.5% over 2021.
One of the hardest things for many buyers to contend with is that there are plenty out there with cash to spend that aren’t even inspecting properties - they are making offers as soon as the listing is placed online, foregoing building and pest inspections, and just taking a chance on throwing out an offer to see if they can snag a home.
Clancy Yeates, journalist for The Sydney Morning Herald, recently pointed out that the biggest difference between the current boom and previous booms, is that this one is being led by owner-occupiers rather than investors. We only need to look back a few years where investors made up close to 50% of all new mortgages whereas now, it sits in the low 20%.
The big question - how far will your money go in the Sydney housing market in 2021? In a market where the median property price can sit in the millions, it’s tough to predict just how far your money is going to go when purchasing a new home.
While the performance of houses is going strongly, units are providing a lower entry cost into the market for buyers, with plenty sitting in the lower-middle price bracket of $600,000 to $800,000 but for some buyers, it may mean moving out of their preferred area and into places like Beverly Hills, Sans Souci, and Peakhurst.
For those looking for a family home, suburbs such as Box Hill, Austral and Airds are going to provide a more affordable option than many other suburbs.
Of course, the other option for buyers looking to make the most of their money, are brand new builds providing something a little different. Montane Kellyville and Elysian Apartments in Alexandria are just two of the new builds making their way onto the market. Both have been popular with potential buyers looking for modern homes without breaking the bank.
What’s going to happen on the property market in the next 12-24 months really is anyone’s guess - unless you have a crystal ball to tell the future, there are numerous factors which could influence whether prices continue to rise or not. What is clear however, is that the longer you wait to get into the market, the less purchasing power your money is going to have.
Getting in while interest rates are low and incentives for new builds are around is going to help stretch every dollar just a bit further.