New South Wales will be the first state to open borders to fully-vaccinated Australian citizens and residents, which is set to effect the Sydney housing market with positive implications predicted for 2022.
The Announcement:
Fully vaccinated Australian citizens and residents will be allowed to fly into New South Wales without quarantine from November 1, and this is set to provide a timely boost to the Sydney economy.
Pete Wargent, the co-founder of Australia’s first national network of property buyer’s agents BuyersBuyers said “initially the travel will only be open to citizens and residents, and their families, rather than tourists or international students. But thousands of Australians will leap at the chance to return, and flights into Sydney are likely to be full for the remainder of the year. Families and friends reuniting before Christmas will deliver a genuine boost to the local economy.”
“The move is a crucial step in the process of reopening Australia to the world and getting workers and businesses back towards their full capacity. This will have a flow-on effect impact in the form of a confidence boost and ‘back to normal’ that is greatly needed by individuals and businesses.”
Mr Wargent said, “Australians wishing to leave will also be allowed to fly out of the country, but overall this move is likely to be a sugar hit for the local economy, and there will be some positive implications for the housing market in Sydney.”
“While the immediate impact on the housing market will be limited, the impact will be noticeable in 2022. After a prolonged period of elevated rental vacancies in the CBD and its immediate surrounds, things will start to tighten up over 2022 as new arrivals fly in, and the rental market should strengthen from here, especially for short-stay lets” Mr Wargent said.
Sydney unit market to pick up
Doron Peleg, CEO of RiskWise Property Research said, “the move will ultimately force other states such as Victoria to advance their reopening roadmaps, but as first cab off the rank Sydney will be the first market to see an impact from international arrivals.”
“We expect the regulator APRA’s moves to tighten lending to more leveraged borrowers combined with growing affordability challenges to see more buyers in Sydney looking at family-suitable units and other attached dwellings, as affordable alternatives to freestanding houses. The price differential between houses and units in Sydney has never previously been so stretched, and the deposit gap will push more buyers towards units.”
“Based on our research, the greater the price differences, the higher the likelihood that family-suitable units will deliver strong price increases, as these units deliver an excellent benefit, considering their average price” Mr Peleg said.
Mortgage serviceability ratios are currently favourable for property investors due to the decline in interest rates. RiskWise expects unit prices in the supply-constrained markets of Sydney appreciating materially over the coming year, with mortgage rates expected to stay very cheap for some time.
Mr Peleg of RiskWise said that “in particular, boutique developments with no facilities such as lifts, pool, or a gymnasium are likely to outperform due to strong demand by investors, downsizers, and well-off professionals who seek low-maintenance and comfortable dwellings. The high land value content in these locations and unit blocks tends to drive capital growth over time.”
“The Sydney unit markets where we expect to see robust performance include those in the eastern suburbs, in the $1 million to $1.4 million price range, such as Vaucluse and Bellevue Hill. Our research has also highlighted some sub $800,000 suburbs in the inner west, such as Strathfield and Summer Hill”.
“There is also a range of suburbs on the north shore and in the northern beaches, which look attractive from a unit to house price ratio, including Mosman and Cremorne, and some of the other premium locations”
“Median unit prices in the $1 million to $1.4 million price bracket, with a high land to asset ratio available on boutique unit block purchases, are relatively more accessible to the booming investor cohort” Mr Peleg said.
Mr Wargent of BuyersBuyers said “investors are coming back into the market now, so those with a borrowing capacity with around $1 million will undoubtedly be looking at units in Sydney over the year ahead, with plenty of opportunities to buy a property that will deliver a strong capital growth”.
“A word of caution: buyers need to ensure that they buy a high-quality property, with no significant issues, either in relation to the location of the property, or in relation to the specific property attributes”
“While there’s currently an outstanding demand for almost all properties, at a later point of time, under ‘normal’ market conditions, the demand for B-grade properties will not be as strong as the demand for top-quality dwelling units. Buyers should have a cool head and avoid decisions they might regret later” Mr Wargent said.
Source: Medianet
