Market Wrap for 2020 & 2021 Outlook

It is fair to say that 2020 is likely to be a year not soon forgotten, and this statement could not be truer for those involved in the property industry. From buyers to sellers, sales agents to buyers agents, landlords to tenants, there hasn’t been one part of the industry that hasn’t been flipped on its head this year, fortunately, many of these parties have been righted by the resilience of the Sydney property market, which has seen one of its strongest performances in decades.

Low interest rates, lack of housing stock, government spending, grants and support have seen a flurry of buyers hit the market in the second half of the year, driving prices higher overall in the post COVID-19 Market. Indeed, we have seen many of the major research houses, such as SQM Research; and lending institutions including ANZ Banking Group, the Commonwealth Bank and National Australia Bank revise doomsday forecasts of a 30% price drop issued in March, with a heavy resurgence in terms of price growth expected in 2021, with most forecasts allowing for somewhere between a 8 – 11 per cent price growth next year. Interestingly, most of these forecasts allow for a total shut down of the Real Estate Industry for a period of 6 – 8 weeks as a result of a second wave of the COVID19 Virus.

Further fuelling this expected increase in value is possible changes to NSW Stamp Duty, which may see the ability for buyers in future to elect to pay their Stamp Duty over the time the own the property, rather than at the time of purchase. While this is likely to help first home buyers entering the market as is it’s intention, this provides a dangerous temptation for buyers who have money saved up for Stamp Duty, as in the case this does eventuate, it is likely that buyers who wait to avoid the upfront stamp duty outlay will face fiercer competition at the time of buying in future, and miss out on likely capital gains between now and then. At this stage the changes to NSW Stamp Duty are unconfirmed, and still yet to be put before Parliament.

Renovations are also at an all-time high, with many families taking money that may have been spent on holidays or other discretionary expenses and using these funds to instead improve the family home. Many builders are booked out well into 2021.

In my opinion, the 2021 market will be dominated by a few different types of buyers, being:

1. Upgraders:

The change to many people’s work life, and the now very common situation of working from home have seen many families quickly outgrow their current properties, well before their initial plans allowed. These buyers are likely to enter the market to capitalise on the low interest rate climate, and potentially access equity in their own properties to allow them to purchase a larger property, while retaining their original property as an investment.

2. Down-sizers:

Low stock levels in the Premium Market show buyers entering the market once putting the “family home” on the market. In many cases, these buyers are older, and have children who have now moved out of the large family property. These buyers tend to enter the market with deep pockets, following the sale of a large asset, and can cause a problem for those looking to upgrade their property, or buyers who are financing a purchase.

3. Investors

The resilience of the Sydney property market and encouraging growth forecasts for 2021 has shown that property is indeed a safe bet when it comes to parking your money. With this, investors are returning to the market, seeking to add to their property portfolio.

We’ve seen some great results for our buyers in 2020 and forecast this to continue into next year. Great opportunities exist in this market; however, it is critical that buyers are prepared to move quickly on the right opportunity to out manoeuvre other buyers and get ahead of the competition.

This means:

· Having a Fully Assessed mortgage pre-approval in place, prior to starting a search,

· Retaining a conveyancer/ solicitor to ensure that the relevant due-diligence is complete in a timely manner when a property meets the criteria you are searching for,

· Being prepared to act dynamically, and present offers in a way which makes them more likely to be accepted, for example; having deposit available, and being able to meet Settlement terms that make your offer more attractive to the vendor.

I’d like to thank all of our Clients and Partners for a fantastic 2020, wishing you all a very safe, happy Christmas, and we look forward to assisting you in 2021.

I’d like to thank all of our Clients and Partners for a fantastic 2020, wishing you all a very safe, happy Christmas, and we look forward to assisting you in 2021.

Matt Spooner

Director – Buyers Market Sydney