Elite AgentINDUSTRY NEWSNew South WalesNEWS

Scarcity tipped to be a boon for Sydney market in 2021

Sydney’s property market has not only defied some of the dire predictions being talked about at the start of the pandemic, it has exceeded expectations, with many forecasting double-digit growth this year.

With demand at a high, the biggest issue for 2021 looks set to be scarcity and in a market with supply shortages, predicting what buyers may be willing to pay for individual properties is an inexact science.

According to CoreLogic figures, Sydney experienced 0.4 per cent growth over the past 12 months, with economists predicting property prices will rise anywhere from 4 per cent (NAB) to 14 per cent over the course of 2021.

Raine & Horne Group’s Executive Chairman Angus Raine said experts were predicting a combination of low interest rates, an improving economy and government stimulus would play a role in driving up values but scarcity was at the top of the list.

“Whether the scarcity relates to the house or land size, the type of property, construction quality, unique view or location, making price predictions is challenging,” Mr Raine said.

Jason Boon, Director of Richardson & Wrench Elizabeth Bay/Potts Point, said although Waverley and Woollahra were the only two Eastern Suburbs council areas to record overall positive change in dwelling values in 2020, significant growth was recorded in many individual suburbs in the region.

Mr Boon pointed to Domain’s third-quarter house price report for 2020, which showed impressive price rises in some of the city’s eastern suburbs, especially those that offered lifestyle benefits such as beaches.  

He said highlights in the top 10 suburbs for price growth in Sydney’s east included South Coogee, which was up 13.4 per cent, North Bondi (12.4 per cent) and Coogee (11.7 per cent). 

Despite an emphasis being placed on people looking for more space outside city centres, Mr Boon also noted Surry Hills experienced 9.5 per cent growth in 2020.

“Perhaps even more impressive are the five-year growth figures for some of our suburbs,” he said.

“Coogee has really boomed with growth of 41.7 per cent over five years. North Bondi grew 36 per cent, and South Coogee 30.7 per cent over the same period. Meanwhile, Surry Hills has increased by 30.5 per cent.”

Mr Raine said sudden market movements often influenced pricing.

“For example, the rezoning from a single dwelling area to higher density can cause market values to rise or fall suddenly,” he said.

“This is not to say that market valuations are worthless. For properties where scarcity and market movements are not in play, a real estate agent is clearly in a better position to predict buyer behaviour.”

Mr Raine said a range of factors other than scarcity contributed to determining “the right price”, including the amount of cash at the buyer’s disposal, a property’s proximity to a buyer’s extended family, and the perceptions of the suburb or town.

“Also, it’s difficult for an agent to predict a price when there are in some instances over 50 groups inspecting a property,” he added.

“It should also be noted that agents and valuers alike base their valuations on past sales data. This means they are looking through the rear-view mirror as opposed to over the bonnet future value.”

He said auctions remained “the true litmus test for determining the real value of a property”.

Show More

Daniel Johnson

Daniel Johnson was the news editor for Elite Agent. He worked with the company from February 2020 to June 2020. For current stories, news alerts or pitches, please email editor@eliteagent.com.au.