As Sydney deals with unprecedented lockdowns due to COVID, activity in the economy and property market has stalled. The property market which has boomed since the beginning of 2021 has performed better than the economy during the lockdown.
The ASX also gives no hint as to the drama playing out in the real economy. The ASX hit a record high in July 2021 as the COVID lockdowns gripped Sydney. Only time will tell how long markets can persevere in these conditions.
Given markets have gone wild due to government’s love of easy monetary policy, few have been prepared to call this the end of the 2021 property boom.
The property market is holding due to:
- Mortgage deferrals
- Cheap money
- Lack of listings on market
- Buyer sentiment is positive, optimism beyond the current lockdown
- The rest of Australia’s economy is operational
- Modest Government income support for impacted businesses
As happened in 2020, the current COVID outbreak and subsequent lockdown saw immediate distress emerge in the rental market. Many landlords who had only just seen their weekly rents claw back the ground lost in 2020 faced requests from impacted tenants for rent reductions.
The State Government’s ‘No Eviction’ policy also returned in order to protect vulnerable tenants. The Government also offered direct support to landlords who reduced the rent for impacted tenants. Clearly there are no winners in this space.
Whilst many of the trends in the rental market replicated what occurred in 2020, the sales market forged a new path.
It can be said without doubt that buyer confidence and a willingness to transact has been higher in 2021 than during last year’s lockdown.
Many of our sales during July were buyer competitive. Five buyers all submitted bids in the Silent Auction on 6/114 Pitt St Redfern that sold for more than $150,000 over the Price Guide. This sale was nearly $250,000 higher than the sale of a near identical townhouse that sold in the complex in December 2020.
An apartment in The Allen complex in Leichhardt achieved a record price of $1,116,000 for a 2 bedroom apartment, after four buyers submitted bids.
As the lockdown dragged on and restrictions looked like a way of life for the short term, prospective vendors came to the market.
With spring approaching, there will be a wave of forthcoming vendors hoping lockdown restrictions at least ease to coincide with their spring campaign.
The Public Health Order has banned all public auctions and open house inspections until August 28, 2021.
Whilst many have booked Online Auctions, the vast majority of successful auction campaigns have been sales negotiated prior to the Online Auction.
There are many risks for the property market going forward. Predicting how the market plays out between now and Christmas requires either a brave analyst or a wild guess.