Upper North Shore property market continues to surge
It’s no exaggeration to say that the Sydney property market started 2021 with a bang. In the five months to 31 May 2021, the average dwelling price across the city lifted 12.5% according to CoreLogic – one of the highest growth rates ever recorded.
What we’re noticing though is that not all parts of the market are moving in unison, which means that this can actually be a good time to buy, as well as to sell.
Ku-Ring-Gai recording impressive numbers
In Ku-ring-gai, sales results remain impressive. On 17 June 2021, the North Shore Times reported that the auction clearance rate was 83%. That’s not quite as high as we were recording earlier this year but it’s still an indication that the market is strong and there is significant buyer depth.
That’s good news for many who are interested in selling. So too is the fact that median prices have risen every month in virtually every suburb.
That said, rising prices themselves don’t tell the full story of today’s market on the Upper North Shore.
Houses outperforming units
Most notably, family homes and premium properties are in strong demand, while apartments – particularly entry level apartments in new developments – are tending to lag.
This trend is reflected in the median values, with houses outperforming apartments in virtually every suburb.
Source: Realestate.com.au Neighbourhoods
Another interesting statistic, reported by CoreLogic, was that in the three months to May 2021, prices in the upper quartile of property prices lifted 12% while those in the lower quartile lifted 5.0% – another sign that it is the top of the market that is seeing the most action.
A question of demographics?
We believe this trend is happening for several reasons. First, COVID-19 changed many people’s priorities when it comes to buying property. With more of us spending more time at home, space and privacy became more important to many people. Incidentally, this trend is also playing out in the number of large scale renovations we’re currently seeing in our area.
Lifestyle became more important too, and with Ku-Ring-Gai offering bushland, parks, access to the M1 and a generally slower pace of life than suburbs closer to the city, this puts increased demand on our area too. We’re seeing many buyers looking to relocate here, as well as local buyers looking to upsize.
A third factor is that over the past year or so, we’ve seen a massive increase in the number of expat buyers looking for Sydney property.
At the same time as this happens, immigration has more or less halted and population growth has stalled along with it. With fewer people competing for rental properties, investors haven’t been out in large numbers (although this is beginning to change according to ABS data).
Downsizers, first home buyers the real winners
So, while the headlines about Sydney’s property’s market tend to focus on a perceived lack of affordability, this doesn’t tell the full story. The current market conditions actually suit certain types of buyers, most notably first home buyers and downsizers.
After all, both are over-represented in the ranks of people buying apartments.
For first home buyers, interest rates are at record lows, making property more affordable. There are also generous government incentives to help buyers get on the property ladder both at State level (stamp duty exemptions and, at times, the First Home Owner grant) and federal (the First Home Loan Deposit Scheme).
Meanwhile, downsizers sometimes have the luxury of being able to sell the family home into a white-hot market and buy into one that isn’t quite as competitive. And downsizers aged 60 and up also have the option of contributing up $300,000 each from the sale of their home into their super.
What to expect for the rest of the year
We expect property prices to continue to grow for the remainder of 2021. There is still significant buyer interest in many parts of the market and the fundamentals of the economy remain strong, with GDP rising and unemployment falling. By and large consumers and businesses are confident, despite ongoing border closures.
However, we don’t expect that we’ll see the same incredible growth that many parts of the market experienced over the early part of the year. The Sydney housing market (as opposed to apartments) rose by 15.1% in the five months to 31 May. That’s not sustainable. It’s better that we see a slow pull back, with more subdued growth rather than an out-of-control boom that leads to bust.
We also believe more and more first home owners and investors will begin to see value in the entry level market and that prices here will begin to slowly rise.
If you’d like to know more about the state of the market or are looking at trading down or trading up, get in touch with us today.
In the meantime, it’s full steam ahead and a sellers’ market for Ku-ring-gai property in early 2021 with few signs that it will slow anytime soon.