The arrival of 2021 is perceived by many people as a chance to shed the terrors of 2020, reset the clock and move forward with a new sense of purpose and positivity.
But, to some degree, that does a disservice to how we coped and triumphed throughout the past 12 months. We were tested and ultimately proved our fortitude in the face of overwhelming odds. This should be seen as the silver lining in a dark year.
And the property market is an excellent example of this resilience. Despite many understandably dire predictions in the first quarter of the year (including those by reputable economists) the property market proved strong.
We came through this period of uncertainty and, in the end, saw excellent outcomes and a solid foundation for 2021.
With this as the backdrop, here are my thoughts on how I believe the Sydney property market will perform this year.
First big call
Firstly, I head into the year with huge confidence as there seems to be a prevailing mood that we – as a nation – have turned an important corner.
Demand for property with the right fundamentals remains good, and while supply is tighter as compared to 12 months ago, activity is picking up.
These are all the right ingredients for a solid return to form next year.
Australia is also incredibly well placed on the international stage. Our suppression of the virus has seen our economy open up in a variety of sectors. Sure, we’ve had shutdowns and outbreak scares, but compared to Europe and the USA, our nation is the picture of good health and excellent management.
As such, expect to see Australia viewed as a relocation hotspot for the world’s citizens. At the very least, when international borders come down entirely, a tourism, hospitality and education boom seem likely.
This feeds directly into demand for Sydney property. It is our global capital with an excellent international reputation.
You only have to view the sharp ramp up in Aussie expats looking to secure prestige holdings in and around the harbour and beaches to see what’s on the horizon come the end of the pandemic.
What I will be watching
When it comes to predicting market direction, it is important to keep an eye on a few key metrics.
In Sydney, population growth, low interest rates and low unemployment will fuel capital growth.
Employment numbers and consumer confidence will be key as well– without questions. While the winding back of government stimulus at the start of the year will be a test, I believe some political supports will continue. In short, without an economic recovery, all our hard work in stopping the virus will be wasted. I just do not think our federal or state leaders will let that happen.
Markets to watch
Good quality family accommodation never goes out of style, and post-pandemic Sydney will see popularity for this property type rise further – particularly in the first six months of 2021.
You know the tale. With work-from-home options becoming the norm, there is an expectation we will not be rushing back to the CBD office fulltime. As such, larger dwellings with good separable areas, decent yards, and nearby lifestyle facilities and services (e.g. café hubs, coastlines, parks, good school zones, decent shopping and retail) will be in hot demand.
We are already seeing this trend in the market. Anyone looking for a quality, family home in the Inner West, Northern Beaches, Eastern Suburbs and Lower and Upper North Shore is dealing with plenty of competition.
You will soon need a minimum budget of at least $2 million for a decent three-bedroom house in most of these areas, and in some suburbs this figure will actually be significantly higher.
Perhaps where I am a bit more contrarian this year is in Sydney’s apartment market.
I know this type of accommodation can feel claustrophobic – particularly in the one-bedroom/studio space. Apartments also copped a bit of bad press in 2019 with oversupply worries, and structural catastrophes, making headlines.
On the other hand, they are an affordable alternative to detached housing in great blue-chip suburbs.
The second half of 2021 could well deliver certain unit types strong value gains. Buyers should be seeking large apartments that are part of smaller boutique blocks in blue chip areas.
The drive for apartment living looks like it will come from first homebuyers – a cohort that has made its presence felt over the past year.
Here is why. In the Inner West, $1.5 million might secure a decent quality two-bedroom home. This stock would normally appeal to first homeowners, but most do not have this amount in their budget. But in the same location, you could buy a decent two-bedroom unit with parking for as little as $750,000.
This huge price disparity between houses and units will surely narrow at some point as apartments offer greater value for money.
Mark my words – 2021 is looking strong for Sydney’s market. Securing real estate early in the year will yield excellent outcomes, so be sure to draw on the services of a reputable buyers’ agent who can ensure you select the right property at a reasonable price.