Pent up demand from Sydney buyers emerging from lockdown and Melbourne purchasers likely to soon follow is expected to result in a resumption of the strong price gains recorded in the first half of 2021, with both cities remaining in a state of housing undersupply.
Auctioneers across the Harbour City are preparing for a bumper Spring selling season, with buyers buoyed by the resumption of in-person auctions and open homes since COVID restrictions were lifted earlier this week.
Buyer’s agent Michelle May described the past 18 months in Sydney property as “crazy”, and urged prospective buyers to act as swiftly as they can, or face the prospects of paying more for their dream home or investment property.
“When the initial surge came last year we couldn’t quite cope with demand and we’re back to that again because of the heat in the market,” Ms May told Australian Property Investor Magazine.
“From a buyer’s perspective, this is the worst market I’ve ever worked in and I’ve been doing this since 2008.
“I attended an auction online for a property in Wahroonga last week, 52 people were watching it and there were more than 20 registered bidders.
“On average, I am seeing around 10 to 15 registered bidders at every auction that we go to, and it depends on the quality of the property and the type of property whether that’s more or less.
“And every sale that I’m seeing at the moment is a record of some kind.
“When we are doing pricing research, we do moving price adjustments when sales occur and it’s just phenomenal how much the percentages change in just a matter of weeks.
“Then we say ‘this property is worth this much based on the pricing research that we’ve done and the adjustments that we’ve made, but you need to be aware that it’s probably going to sell above that’.”
Ms May said the combination of cheap credit, an intense lack of supply, difficulties with inspecting properties and delays with banks had resulted in extremely tense buying conditions.
“Unfortunately, a big proportion of conversations that I’m having are with people who are so unrealistic about what’s going on and just not able to grasp the speed at which the market is moving,” she said.
“They couldn’t buy last year and they are still holding onto the idea of their brief and the same budget as last year, and if it wasn’t attainable last year it’s certainly not attainable now and it won’t be attainable in the near future as far as I can see.”
While some market watchers have held out hope that APRA’s upcoming lending restrictions would take some of the heat out of Sydney property, Ms May said she was not expecting price growth to stall any time soon.
The only factors Ms May said would cool Sydney’s price growth would be further lending restrictions or a massive influx of supply that would flip the current seller’s market in favour of buyers.
“I don’t see that happening - Sydney is continuously in the top 10 most unaffordable cities in the world because of the geographical factors that are in effect here as well,” she said.
“We’re surrounded by water and national parks and because there is a limited amount of land being released by the government and you’ve got the different sectors of the market that need to make money - the builders, developers and then finally it gets to the homebuyer.
“So I do not see prices coming down for the foreseeable future at all.”
Meanwhile, in Melbourne, residential markets are also set to intensify as coronavirus restrictions are wound back.
Last month’s resumption of one-on-one property inspections has already translated into a lift in auction volumes, with the 1,357 homes taken to auction last weekend up 68 per cent from the previous week.
Just 7.7 per cent of those auctions were withdrawn, down from 61.6 per cent in August at the height of Melbourne’s Delta outbreak and its strictest restrictions.
Wakelin Property Advisory director Jarrod McCabe said while the market was heading in the right direction, the remainder of 2021 would likely to remain unconventional, with campaigns, inspections and auctions to continue to look different.
“Preparedness, agility and close contact with agents will be crucial for both vendors and buyers alike within the fast moving, but irregular operating conditions,” Mr McCabe said.
“The industry is adapting well to the new inspection requirements, with agents efficiently organising viewing inspection times to get as many buyers through prospective properties as possible.
“It puts the impetus on buyers to ensure they are punctual, as those who arrive late are being put to the back of the queue.
“The regimented nature of one-on-one inspections has meant most buyers who are turning up are of a serious nature, culling those who may ordinarily wander through for a sticky beak.”
Mr McCabe said mid-week online auctions would continue to be a feature of the market in the short term, allowing buyers to bid on properties they’d viewed at the weekend.
He said a transition back to allowing 10 people to view a property at one time would also accelerate market activity heading into the Christmas period.
“We’ve seen contracted sales campaigns as buyers have had ample time to research and carry out remote due diligence, such as contract checks, booking in building inspections and taking care of finance considerations,” he said.
“This creates a somewhat inverted sales journey, particularly in the short term, with property inspections flipping from the beginning to the end of the process as eager buyers wait to tick off their final checks before making an offer.”
And while Mr McCabe said Melbourne’s Spring selling season would not be typical, eased restrictions would set free the backlog of supply and demand created under lockdown.
“Informed, prepared and agile property investors may well find unique opportunities in what is set to be a fast moving market in the months ahead.”
