How long can it last?

Back in April this year I speculated on when we could anticipate a possible easing of the extraordinary market intensity that was evident at the time. Five months on, nearly two months into a lockdown and still a large majority of my conversations with clients revolve around exactly the same question. How long can it last?

There is no doubting the sustained strength of the residential property market despite the economic and social impacts of the pandemic.

The growth in home values over the last twelve months in Sydney is now at 20.9%. Over the last three months to the end of August, even whilst we have been in lockdown, the growth in value in Sydney has been 6.4%. Over the last month when the entire state has been in lockdown the growth was still 1.8%.

Yes, it is slowing, but CoreLogic highlighted last week that, ‘the annual increase in national dwelling values is $1,990 per week’. That’s extraordinary.

And as is to be expected I think affordability is increasingly playing a role in market activity. Back in April, I predicted demand for apartments would start to catch the growth in houses and the latest data shows that to be happening. What was a 2% difference in growth rate of homes in comparison to apartments is now just a 0.6% difference in growth.

As anticipated, it appears there is a section of the buying community that have changed their search property criteria in response to the challenge of home affordability. That has led to increased demand for apartments.

Our team are seeing evidence of that strength in the apartment market. The experienced Morton crew in both Woolloomooloo and Pyrmont have recently negotiated several sales each more than $4 million. The Morton teams in Wentworth Point, Green Square and Penrith are also delivering very strong returns for clients. 

I should also point out that that we are seeing increased listings come to market and I expect that to continue. Rather than dilute demand the increase in listings is immediately being absorbed which is why we are not seeing values impacted.

In terms of how long this level of incredible demand can last, honestly, I don’t know. That remains the million-dollar question…. or perhaps I should say the $1,28 million dollar question given that was the average price delivered by the Morton sales team in August!