This time 12 months ago, the outlook among most property commentators for real estate in Sydney in 2019 was pretty grim. We were a few months out from a federal election that almost everyone expected Labor to win, which would have ushered in some potentially damaging property reforms and put further downward pressure on prices. Median values throughout Sydney were falling, as they had done for some 14 months, and there was little end in sight.
But among the chorus of doom and gloom were a few contrary voices who saw an end to the downturn and predicted that an extended period of growth was looming toward year’s end. They were the experts worth listening to.
When it comes to what you can expect for Sydney property in the coming 12 months, those informed voices may be worth listening to once again.
Here’s what they say…
The Market Whisperer
Louis Christopher from SQM Research has been the go-to for market insights in major cities across Australia for a long time. His forecasts are reasoned and backed by well-researched data. In 2020, he expects Sydney property to experience double-digit growth of between 11 and 16 per cent.
More than that, he expects Sydney real estate this year will pass previous price records experienced at the height of the last boom in 2017 – 2018.
This is due to continued strong population growth, record low interest rates, easier access to credit and a strong and stable local New South Wales economy.
The only potential stumbling block to especially strong growth is the chance of intervention by the financial regulator APRA, which Louis said may happen towards the end of 2020 if the heat in the Sydney market gets too high. In that scenario, the annual growth rate could dip a little to 9 per cent.
That’s still not bad, especially considering where we were 12 months ago.
The Mood at Moody’s
Financial research house Moody’s Analytics is just as confident about the outlook for property in Sydney in 2020 and beyond. It’s predicting a 7.7 per cent increase in median house values in the coming year, followed by another 7.6 per cent rise in 2021.
When it comes to units, Moody’s expects fortunes there to be just as strong, with a 7.9 per cent lift in medians in 2020.
How the Big Banks feel
The views of economists at major banks and financial institutions are worth considering because they tend to balance market dynamics with a more conservative tone.
Westpac expects price growth in Sydney in 2020 of around 6 per cent, but it has also forecast an easing of that upward trajectory towards the end of the year as affordability issues start to bite. They believe prices are simply too high for a large segment of the market and this will constrain the speed of growth.
ANZ has a similar outlook for next year, also tipping an annual median property price increase of 6 per cent. This is an upward revision of their previous forecast of 3 per cent, which is a sign of how quickly things have shifted in recent months.
Man on the Ground
Doug Driscoll is the boss of boutique agency Starr Partners and recently releases his annual forecast for major markets.
He expects Sydney’s median dwelling price to lift between 5 and 10 per cent in the coming year. That figure is based on current market conditions. Should the Reserve Bank cut the official cash rate again, which many economists now expect it will at some point in the next six months, then that figure could exceed 10 per cent.
The surge in Sydney prices is being driven by a significant gap between supply and demand. The number of buyers out and about is far above the volume of available listings and Doug thinks that trend will continue for a long while.
Another interesting observation from his forecast concerns first homebuyers. Doug believes the proportion of debut buyers in Sydney will lift significantly in 2020, thanks to cheaper lending, a sense of FOMO and new government incentives.
That will lift activity – and prices – at the lower end of the market especially.
And on that Note…
My two cents – it’s important to remember that any market forecasts are for the entirety of Sydney. There will be pockets within the city that see no price growth, and indeed there will be some that move backwards.
It is critical to seek out the areas that offer the best growth prospects in the short and long-term. Engaging a qualified, independent and experienced buyer’s agent will give you the best chance of not only unearthing these areas and the opportunities within them, but securing an excellent property amid some intense competition.
Always remember that like any investment, there are always risks and rewards in buying and owning any property. The information contained in this email is a guide only and in no way constitutes financial advice.
To discuss your property purchase in 2020, call me today on 0405 134 645.
Nick Viner
