Sydney home prices increase by biggest margin since pandemic hit


Sydney property prices have risen by the highest monthly margin since the COVID-19 pandemic hit thanks to a late-year surge in home buying activity.

Home prices rose by an average of 0.7 per cent over December – the third successive month of property price increases and the highest monthly growth since the first lockdowns in March.

The median price of a Sydney home is now about $871,000 – 2.7 per cent higher than at the start of October, according to CoreLogic’s hedonic home value index released Monday.

CoreLogic head of research Tim Lawless said prices were rising because buyers far outnumbered listings.

This was creating a sense of “urgency” in the market and buyers were making higher offers to beat strong competition from other house hunters, he said.

rpdata Research Director Tim Lawless pictured in Sydney on Monday.

CoreLogic head of research Tim Lawless said there was a sense of urgency among buyers.

“Record low interest rates played a key role in supporting housing market activity, along with a spectacular rise in consumer confidence as COVID-related restrictions were lifted,” Mr Lawless said.

Australia’s relative success in containing the spread of the virus also boosted sales, but an uncontrolled outbreak would put that recovery at risk, he added.

“Containing the spread of the virus has been critical to Australia’s economic and housing market resilience,” Mr Lawless said.

CoreLogic noted the pandemic’s impact on the market was relatively short-lived.

There was a 40 per cent drop in transaction activity across Australia from March to April but a late-year surge in buying activity meant the year still ended with 8 per cent more transactions than over 2019.

Aerial view of the Sydney CBD

Prices for higher density housing remain down.

Realestate.com.au chief economist Nerida Conisbee said greater time at home during the pandemic may have been a factor in the higher spending in 2020 as it encouraged families to bring forward plans to upsize.

Real Institute of NSW president Leanne Pilkington said a shortage of available properties suggested strong selling conditions would continue.

“There remains a lack of choice for people looking to buy property,” she said. “Supply remains constrained and schemes like HomeBuilder, while important, do not make a material difference to the supply side.

“The price growth which returned in the second half of 2020, combined with the ongoing supply shortage amid continued strong demand, should see prices remain on course to climb steadily through 2021.”

The high-density unit market remained an area of weakness for the housing market.

11 Georgia Terrace Kellyville

Larger houses are attracting the most buyer demand.

Sydney units underperformed houses over the past quarter, with prices for the former dropping 1.4 per cent, while prices for the latter increased by an average of 2.5 per cent.

Mr Lawless said the mismatch in houses and unit values was because fewer investors were buying.

“Unit markets have historically been more popular among investor buyers; demand from investors has been weighed down by weak rental conditions across the unit sector along with high supply levels in some precincts. A transition of demand towards lower density housing options has helped to buoy house values.”

 

By Aidan Devine