How Bushfires could affect Sydney’s Property Market
As at the time of writing, Australia’s long summer of destructive bushfires continues.
Let me say from the outset, the devastation and loss for those in the path of the inferno is unimaginable, and the outpouring of emotional and material support for victims from everyday Aussies has been incredible. In addition, the heroic efforts of firefighters are inspiring.
Of course, the bushfires will eventually be extinguished but in their wake, we’ll see impacts across all sectors of the economy.
This got me thinking – what are some of the potential effects of this summer’s events on Sydney’s property market and the surrounding regional areas?
Of course, regional centres within the fire zone will be the hardest hit.
While many small-town residents will wish to rebuild and grow stronger, you can’t blame a percentage of the population for making plans to move on.
Expect to see a rise in listing number in these areas – perhaps not dramatic, but certainly enough to be reflected in short-term data.
That said, what should come next is a wave of rebuilding. Insurance payouts are sure to follow, and new homes and business premises established – particularly in areas with a strong, multi-faceted economic base. Demand for labour and materials will bolster employment in some centres which could result in a rising need for housing (including rentals) over the medium term.
Also, a rise in the number of new homes in these areas may, over the long term, improve their median value, as buyers will pay a premium for newer property.
One long term consequence could see Government and planning authorities severely limiting future planning and development in bush fire prone areas. This would only serve to increase demand thereby pushing up prices for established properties in non-bush fire prone areas, the effects of which may be felt as far afield as Sydney.
Of course, when there’s more building in the bush, there’s less left for the city.
The flow on for the heart of our State’s capital might well be a reduced supply of labour and materials in the construction sector as work heads out of town. This will likely translate into increased construction costs and build times.
Of note too – Sydney metro suffered an extended period of persistent smoke haze and lower air quality which made our city a little less liveable – particularly for empty nesters and retirees. Given there’s already been a rise in interstate migration to other jurisdictions over the past few years – such as Queensland – the bushfire fallout may compel some to move north sooner than they’d originally planned. The end result could be a small rise in listing numbers for Sydney.
Also, let’s not downplay the effect of media exposure on our international buyers.
Pictures have beamed around the world of the devastation and horror created by these fires. Smoke-filled, red-hazed Sydney sunsets were a staple on social media too.
Sydney has always relied on its global appeal to help feed demand for some of its housing – particularly in the prestige and ultra-prestige sectors. While those from other countries have been supportive with donations and well-wishes, many might hold off the idea of purchasing in Sydney as they wait for the dust to settle.
For example, the US recently advised travellers heading to Australia to re-consider their plans – even going so far as to assess our country at the same risk level as Hong Kong which has been in the grip of political turmoil. We even noted French actress, Isabelle Huppert, along with the rest of an overseas production cancelled their plans earlier this month to perform in Sydney. Combine enough of these decisions to ‘stay away’ and it adds up to lost dollars for Sydney’s economy.
Long term stability
While all these predictions might seem dire and may come to pass in the short term, I’m certain of one call – the long-term effects will be minimal.
There are far more dramatic levers driving Sydney demand and supply. Bigger economic gears both nationally and internationally – as well as the finance/home lending landscape, employment numbers and infrastructure.
In short, consequences across the entire property landscape will be minor compared to how other factors drive values. So, let’s understand what’s happening, but there is no need to be alarmist or reactive.
As always, make sure you rely on advice from an independent, knowledgeable professional who can help you navigate the ever-changing property market and put into perspective the outcomes from this horror holiday season.
If you’re new to the idea of investing in Sydney’s ever-expansive real estate market, get in touch with our buyer’s agent Sydney to see how we can help.
To see how a buyer’s agent can make your Sydney property dreams a reality call Nick Viner today on 0405 134 645.