Sydney and NSW market update - April 2021

After a scorching first quarter of the year for property prices around Australia, and especially in Sydney and regional NSW, the market has simmered down slightly through April. 

The 2021 boom has been eased in part by a long overdue injection of new stock on the market, with CoreLogic reporting more than 40,000 new residential properties being listed in the four weeks to April 25th—+14 per cent above the five year average for the month. 

The market is still well in the green, though, with the national median dwelling value climbing +1.8 per cent and NSW as a whole significantly outperforming that number. 

Sydney was the second best performing capital city for the month, and regional NSW posted the same result against the other states. 

Auction clearance rates remain consistently high—around the 80 per cent mark or higher for Sydney—as buyers continue to be driven by record low interest rates, a long-term undersupply of properties on the market and a general sense of FOMO that's yet to dissipate. 

Sydney market update - April 2021

Sydney clocked a +2.4 per cent jump in median dwelling value in April according to CoreLogic's latest data, second only to Darwin which topped at +2.7 per cent. 

The boost brings the city’s median property value another step closer to the $1 million mark, currently sitting on $950,457. That's an increase of $22,429 since March.

Sydney's properties rose in price by another $5,233 per week or $748 per day throughout April. 

Houses again outperformed units by more than double, rising by +2.8 per cent versus +1.3 per cent for the month. 

It caps off a blistering run for houses since February that totals a +10.5 per cent increase over three months. In that same period, unit values rose +4.7 per cent. 

Another continuing trend is the gap in performance between Sydney's upper and lower quartiles.

When comparing the most expensive 25 per cent of houses to the least expensive 25 per cent over the past three months, the top quartile's values increased by +11.4 per cent while the bottom grew just +5.0 per cent. 

CoreLogic notes that this difference is caused in part by the strong performance of houses versus units, although units in the upper quartile have more closely matched the uplift of houses. 

Regional NSW market update - April 2021

Looking beyond Sydney, regional NSW also turned in a stronger-than-national result in April, showing a +2.2 per cent uplift that takes median dwelling prices up to $555,885. 

That amounts to a total increase of +7.4 per cent over the past three months, making NSW the second best performing regional market behind Tasmania. 

Houses in regional NSW have had an especially buoyant time of late, stepping up +2.3 per cent in April to reach a +7.6 per cent increase for the quarter. 

Over a 12 month period, houses have risen a staggering +16.3 per cent, making regional NSW one of Australia's top three performing markets for the year—upstaged only by houses in Darwin and regional Tasmania. 

Units had a more moderate increase of +1.8 per cent for the month, although they're still showing an impressive +6.0 per cent increase over the past three months. 

Sydney and NSW rental market update

Sydney's shaky post-Covid rental market has continued to stabilise in April, with both houses and units showing an increase in rents. 

There's still a vast split between the two property types, though. Sydney house rents are up +4.1 per cent over the past year  compared with -3.6 per cent for units.

CoreLogic's research director Tim Lawless points out that "prior to Covid, Melbourne and Sydney accounted for around three quarters of overseas migrants into the capital cities.

"With international borders remaining closed, rental demand in these cities, and in particular their unit market, has been materially impacted."

Gross rental yield across Australia is now at a record low of 3.5 per cent, with Sydney's figure sitting considerably lower at around 2.7 per cent, indicating an imbalance between housing values and housing rents. 

Regional NSW is delivering better numbers, with rental yields currently sitting at 4.2 per cent, however this is still significantly lower than other states, save for Victoria. 

REINSW's latest report shows that rental vacancies in Sydney were at 4.0 per cent by the end of March, up 0.9 per cent from February 2021 and currently at their highest level since October last year. 

Sydney's higher density inner and middle rings have been hit hardest, rising to 4.5 and 5.8 per cent vacancy rates respectively. 

Regional NSW is telling a very different story, with hubs like Newcastle and Wollongong both recording drops in the vacancy rate to 0.7 and 1.6 per cent respectively in March and the majority of regions either dropping or remaining relatively steady. 

What's next for the Sydney and NSW markets?

The major banks' latest forecasts are still projecting slowed but steady growth for the Australian property market throughout 2021 and into 2022. 

The latest auction results collected by CoreLogic show Sydney is still sitting above the magic 80 per cent clearance rate line, indicating the heated conditions are still very much present. 

Ray White Touma Group partner Max Klimenko, who services the inner suburbs of Sydney, says "I don't reckon the market is going to cool off any time soon. 

"I think as long as interest rates remain quite low and we've got really tight stock levels there’s going to be quite heavy competition for properties."

Conditions should remain strong in regional areas, too, Domain's senior research analyst Dr Nicola Powell suggests. 

"The regional areas are now really outperforming the capital cities and experiencing some huge growth,” she said.

"As people from the cities move into some of these areas, on their city salaries, they’re helping push up prices and rents even more."