The South Sydney property market started the year stronger than expected and despite a heavy drop in auction clearance rates and a wave of negative speculation across the media that a correction was coming buyer demand is back up. January figures from Corelogic show values up 1.1% nationally with Sydney recording a 0.6% gain. Brisbane 2.3% and Adelaide 2.2% lead the capitals with the regional markets along the East Coast by far the strongest. The 0.6% January gain translates to 7.2% annual growth in Sydney this year however January is the lowest turnover month in Sydney with close to no auctions.
Early signs are indicating auction clearance rates have already lifted back to levels we saw in October.
This year we still expect to see growth at a slower pace and a stabilisation phase with little change over the next 24 months in Sydney. Housing has seen astronomical gains over the past 12 months, however apartment values in built-up areas have not. In some sub-markets such as Mascot precinct values are still behind on 2016 which opens doors to investors and first home buyers seeking value and adds diversity to our marketplace.
Regional markets such as the Southern Highlands and the North Coast have been a preferred choice for many South Sydney residents trading down, and these areas will continue the growth throughout 2022 as they absorb the pool of cashed up buyers from Sydney who sold in 2021. The Gold Coast continues it’s bull-run having delivered record numbers and all time high clearance rates over the new year period. In some areas having recorded 50% gains in 2021.
The RBA governor Philip Lowe conducted his annual address to the National Press Club on Wednesday, who were all ears when it came to his outlook on interest rates for 2022. Dr
Lowe indicated that the official cash rate may likely rise in the later part of the year but was eager to point out that a rate hike would only be by-product of positive progress towards full employment and healthy inflation. With the record low 0.1% emergency cash rate currently in place I see an early rate hike to be a welcome indicator that the broader economy outside of shares and property is recovering.
The RBA is still downplaying other economists tipping a cash rate of 1% by the end of the year. The big banks also tip a cash rate hike with most majors 0.55% up on their two year fixed rates and up about 1% on three year. At 2.19% Westpac & ANZ currently offer the lowest variable rates.
Rental values are expected to be the star performer this year in Sydney as vacancy rates now hit 1.9%. Inflation will fuel further demand as the cost of living goes up in line with tighter lending amidst record high house prices. With the fear of missing out also subdued, and the potential re-opening to overseas students we may see a significant long-awaited growth cycle for rental values in Sydney which has been at the bottom of the Australian Capitals ladder for quite some time.
With interest rates an unlikely key player in this years property market we also turn to the May federal election in which Labour leads the two-party preferred basis by 56/44. However, with Australian property owners having created $7.3 trillion dollars of wealth between March 2020 and September 2022, the coalition may hold a strong position when it comes to winning votes to maintain status-quo.. The last federal election in 2019 was a pivotal event in the Sydney property market so it will be interesting to see if it takes the same course this year under a much stronger economic climate and without a Labour proposal to scrap negative gearing which is off the table this time round.
See bottom for links to sales data for January in the Bayside, Randwick and Sydney City Councils. For selling enquiries please feel free to click this link for a cost and obligation free professional opinion on your homes current value.
Billy Couldwell, Licensed Real Estate Agent- Ng Farah 0416 713 721 billy@ngfarah.com.au
