With the election behind us, real estate is firmly in the minds and on the lips of many people. Australian residential property prices rose 23.7% through 2021, surging at the fastest annual pace on record. Darling talks to Cindy Kennedy of McGrath Balmain about what’s happening in our local market and why there’s an increased attendance at open homes.
More buyers are showing interest in our area
Many people that stopped looking two years ago are back in the market. Investors are definitely back, and they’re looking to buy in areas where people want to live. With our borders now open, ex-pats will be moving back to rent or buy.
Michael Yardney’s property update gives great insights into people wanting to buy within 20 minutes from where they work. He mentions that Australia has a business plan to increase population to 40 million in the next 30 years, that’s more than 50%!
“People want to live here for the convenience and the livability our area offers, which will be even more pronounced as workers return to CBD offices.”
Being so close to the city and with major infrastructure such as the new metro station in White Bay, the Bays Precinct plan, Westconnex, the new parkland and the Western Harbour Tunnel, it stands to reason Rozelle, Balmain, Lilyfield, Annandale, and Glebe make for very smart buying right now. Look at the huge growth Haberfield has had following the completion of the Westconnex in that area.
While the housing market has softened slightly, which it needed to do, the continued demand for housing in our area remains obvious.
What impact will rising interest rates have?
We’ve noticed people are reducing their budgets as they understand interest rates are likely to rise further after May’s 0.25% increase, with some buyers looking to buy now so they can fix their interest rate. People are also being extremely cautious when buying and taking more care to understand what work may need to be done to a property after purchasing. Presenting a property to a high standard is very important in this market.
While there are likely to be multiple rate rises this year, we have to remember that the current rates are well below anything we’ve seen in the past.
As Owen Wilson from REA Group recently told the AFR, “The interest rates are coming off very low settings and even if all the predicted rate rises come through, it really only gets us back to where we were pre-pandemic.”
“Anyone buying or selling at the moment is doing so with an expectation that these rate rises are coming, and yet, we’re still seeing really healthy levels of listings and transactions,” he said. Wilson also points out that the banks have been using 5% as their serviceability interest rate, so anyone who’s borrowed in the past couple of years should be able to service interest rates up to 5% based on bank calculations.
The rental market turnaround continues
The rental market has had a dramatic turnaround from the last two years. Jade O’Rourke from the McGrath property management department said “With record low vacancy rates across Sydney, renters are routinely offering above- market rents and months of rent in advance to secure a property. We’re at the point where we no longer need to advertise rental properties as we have a large percentage of potential tenants we can lease properties to off market.”
Rental prices for houses in Sydney have climbed by 19.1% in the last year.
To renovate or not
Due to the huge increase in renovation costs and the lengthy delays associated with trades and supplies, many people looking to purchase are homeowners who had previously been
planning to renovate.
These buyers are realising the easier path is to purchase a home already built to their current lifestyle requirements. As a result, we’re seeing a strong demand for well-designed and recently renovated homes, while vendors of homes in need of immediate renovation are having to adjust expectations to meet the market.
Stock levels likely to stay low
Winter is upon us which means the amount of property coming on the market will likely remain low until spring. Supply and demand will mean prices will remain reasonably consistent. The prestige property sector is maintaining value better than the mainstream market, perhaps because buyer decisions are less influenced by rising interest rates.
“We put our heart and soul into achieving the best possible results and will give solid advice, including project managing the trades, to ensure the best presentation to maximise the price for our clients,” says Cindy
Speak to Cindy and Scott about how their strategy may work best for you or if you would like them to help you find your dream home.
Having worked in both rising and falling markets, the advice they give clients is designed to achieve the best result in any market, with a focus on presentation, marketing, price and timing.
Cindy Kennedy | McGrath Balmain
222 Darling Street, Balmain