Sydney residential market is resilient, but expect a slower return to normal after COVID-19
Commentary on the future direction of the residential property sector has been diverse.
As Gary Brinkworth, the boss of the Herron Todd White valuation firm recently noted, some observers are expecting a subtle slowdown, while others predict a catastrophic collapse.
He suggests these views fail to understand the complexity of the Australian residential property sector and that having specialist knowledge at a localised level was key to good decision making.
It adds its can be difficult to keep up as markets adapt to the challenges around COVID-19.
"Some locations have seen monumental disturbance to their usual state of affairs, while others have barely registered a ripple.
"COVID-19 has amplified the diversity of Australia’s resident property markets by location, price point and property type," he added.
Well informed valuers, like well informed estate agents, are well informed on sales activity and price direction.
Brinkworth acknowledged Herron Todd White in Sydney made the decision in early March that all staff would work from home.
The decision was made to ensure that any potential exposure to the virus did not place further risk on other staff and their clients, whose homes they inspect daily.
They changed the way they conduct inspections - with hand sanitiser, face masks and disposable gloves becoming just as importan as their tablets and laser measurers.
HTW has also developed a contactless inspection tool which allows occupants to take internal photos which feed straight into their valuation system, allowing valuations when a COVID-19 related concern means a property cannot be fully assessed.
This has allowed mortgage applications to proceed instead of being delayed by weeks or even months until internal access became available.
His team, while noting some statistics may not yet be showing a decline in values across the Sydney market, have seen evidence from selling agents indicates that values are falling, particularly in some areas and for some price sectors, although not necessarily uniformly within these sub-markets.
The rental market has seen a more immediate impact however, with listings increasing and rents falling, which will certainly have an impact on yields and prices.
Looking around the regions the Northern Beaches has appeared to absorb much of the negative sentiment and restrictions surrounding the pandemic, although "there is a strong chance you will be paying less than you would have three months ago for the same product."
The slowdown in volumes of transactions in inner Sydney and the Eastern Suburbs made it difficult to ascertain any emerging pattern emerging, but HTW advised in previous downturns, the inner city market segment most vulnerable to volatility is the upsizer price bracket, typically from $2 million to $3 million.
It also noted properties falling in the Airbnb sector are being impacted, for obvious reasons.
HTW have been still seeing reasonably strong activity in the west, particularly at the entry level.
Like the eastern suburbs, the North Shore prestige market is more accustomed to off-market transactions, so recent restrictions around open for inspections and public auctions have not impacted this part of the market as much as lower price points.
Overall HTW conclude the long term outcome of the COVID-19 pandemic for the property market is uncertain.
The Sydney property market is resilient, as seen by the recovery from the 2017 to 2019 downturn.
However, HTW anticipate a slower return to normal, depending on just where unemployment numbers end up and the extent of a decrease in short term immigration numbers.