Space: The Last Frontier – or, for those who have been in the Sydney real estate market for the past year, the financial frontier. Because the biggest pandemic trend in 2021 has turned out to be the demand for more space in and around our homes.
“This is truly the year we redesigned the space of our homes and apartments,” says Nicola Powell, head of research and economics at the estate.
“We wanted to have areas in our homes where we could work and, spending so much time indoors during shutdowns, we wanted more living space where we weren’t all on top of each other.
“It’s really behind the growth in house prices relative to apartment prices. But another big surprise of the year was the growth in prices for three-bedroom units. In general, the higher the number of rooms, the more the prices have increased.
It has been a strange year in many ways. With interest rates continuing to their lowest, barely did escalating house prices break all previous records than they broke them again three months later – with consecutive quarters unprecedented price increase of more than eight percent.
As first-time homebuyers flocked to the market again in 2020, they were suddenly swept away again by the price tsunami, with investors rushing to take their places.
Many were only able to soak their toes in early 2021 because of mom and dad’s bank.
“Parents ‘offered’ their children money for their deposits rather than vouching,” says Marcus Roberts, founder of mortgage brokers Brighter Finance.
“There were reports earlier this year that parental contributions averaged over $ 89,000, which is an increase of almost 20% over the past 12 months.
“Other versions of this see parents allowing their children to pay zero rent or pay significantly reduced rental rates on parent-owned properties.”
At times, it was difficult for anyone to keep pace, as Sydney recorded the fastest annual rate of price growth on record, reaching a median house price of $ 1.5 million, with apartments topping the record $ 800,000.
Today, residential real estate is now the largest asset class in Australia, worth an incredible $ 9 trillion, 38% of which is in New South Wales.
Whereas in the 1970s a house cost seven times the average salary, it will now cost the regular buyer 12.5 times their median annual income, according to recent reports. ANZ CoreLogic Housing Affordability Report.
Homebuyers in Sydney will now have to save for more than 16 and a half years to amass the usual 20 percent deposit for a home, after house prices rose 30.4 percent this year.
“I think the most interesting thing this year has been that my house has made more money than me,” said Tim McKibbin, CEO of the Real Estate Institute of NSW. “And I wouldn’t be alone there; there would be many, many people in the same boat.
“But everywhere everything becomes unaffordable, and for many first-time homebuyers, that Australian dream of buying their first home is becoming increasingly beyond their reach, which is unsettling.
“For many others, their mortgages are also exploding with the low cost of money.”
At the top of the market, prices rose even faster, with the settlement of sales of new apartments in Barangaroo consolidating the foreshore square of the CBD port as one of the best prestige addresses in the country.
He had already gained a foothold on the claim historically through the Bennelong Apartments – The Toaster – and again when the Opera Residences set a record of over $ 26 million with the purchase of wealthy businessman and philanthropist Robert Salteri and his wife Kelly, ”says Lucy. Macken, from Domain’s Property titles.
“Then a new record was set by a mystery shopper who purchased the top three floors of One Sydney Harbor from Lendlease for $ 140 million.
“But there is something more certifying about the regulations and this year’s completion of One Crown Residences next door has shown multiple purchases of over $ 40 million, although James Packer has yet to pay his bill. $ 60 million block. “
For houses, Woollahra ultimately claimed a place in the Sydney Trophy Market. It was already an affluent eastern suburb but, given the nature of its historic homes, it had never entered that $ 20 million real estate market … until Kerri-Anne Kennerley scored $ 22 million. dollars for his house.
“It shocked the custodians of the property,” Macken says. “Just like the sale of Rosemont a few weeks later for $ 45 million by Margot, Lady Burrell, although this is more understandable given the size of the estate. “
Meanwhile, a new record for the Inner West was set by the sale for $ 25 million of a waterfront estate in Abbotsford by the Bowes family, who had owned it for nearly 80 years, while the Northern Beaches shattered hers with a $ 27 million purchase of Palm Beach.
The North Rim saw a $ 24 million sale to Northwood, the Upper North Shore a $ 16 million sale to Killara and South Sydney a $ 8.38 million purchase from Sandringham.
The Sydney exodus has been accelerated by COVID-19, with a rush to sea change and tree change destinations, as well as to outer regions and suburbs, as technology has helped the transition to the remote work. It pushed up prices in many lifestyle hot spots – like Byron Bay, which even topped Sydney with a median of $ 1.55 million – and sparked big hikes in other News favorites. -South Wales like Orange, Kiama, Bellingen and Lismore.
“I never thought I would see the day we cost more than Sydney,” says Glen Irwin, director of Byron Bay Real Estate Agency. “But now I expect this to continue. We’ve had so many people come here, and they fall in love with it, and they’ll never come back.
“And we have such a shortage of properties compared to cities like Sydney and Melbourne… prices will continue to rise as people discover how good life is here.”
Many people have also bought vacation homes with the money saved by not traveling, with a recalibration of high-end values in traditional weekend areas like Palm Beach, Dural and the Southern Highlands.
“We’ve had a lot of people shopping here from Sydney, and prices in the area have generally increased by around 25 percent as a result,” says Anita Roelevink, agent manager Stone Southern Highlands. “Then we saw a lot of people moving here permanently.
“They have re-evaluated their life and want a more relaxed time and a village lifestyle in places like Exeter or Burrawang.”
Turning to 2022, most pundits agree that the pace of price growth is expected to slow with a much larger supply now online and a record number of back-to-back listings.
“So in the summer and fall the buying conditions will be better, and people who haven’t been successful before might have a better chance next year,” says Dr Powell. “Demand will definitely slow down.”
This will come sooner rather than later if the interest rate increases towards the end of 2022 or if the Australian Prudential Regulation Authority (APRA) tightens regulations further.
Already they have said that as of last month buyers’ borrowing capacity should be valued at 5.5% instead of a lending rate of, say, 2.5%, and it could be again. tighter.
“A lot of clients are now asking, ‘Is my borrowing capacity less? “As the first question,” says Roberts. “This will likely hit first-time homebuyers the hardest, as they typically borrow more than someone who is already in the market and is moving to their next home. But it could affect everyone in one way or another.