Sydney property market hit hardest by coronavirus crisis: Hotspotting's Terry Ryder

EXPERT OBSERVER

Sydney has been the market most visibly impacted by the Covid-19 period. The number of growth suburbs has dropped sharply and danger markets have doubled.

While other major cities have been notably resilient in the face of the virus crisis, Sydney’s statistics on sales trend and vacancies have deteriorated significantly – although prices in many markets sectors remain resilient.

In our previous (Autumn 2020) quarterly survey, we reported “the strongest Sydney market we have recorded in the five years we have been conducting our quarterly sales surveys”.

But our latest (Winter 2020) survey shows the number of suburbs with rising buyer demand has dropped from 67 to 24, while the number of suburbs we classify as danger markets has increased from 12 to 24.

This coincides with a marked increase in vacancy rates in many parts of the Greater Sydney Area. Sydney overall has the highest vacancy rate among the capital cities and the inner-city postcodes have recorded a major blowout, caused primarily by investors who had previously used short-term letting methods like Airbnb.

Sydney is also most impacted by the shutdown of international travel and overseas migration.

The Covid-19 impact has been a particular blow to Sydney markets because in late 2019 and early 2020 there was a notable revival after a prolonged slump throughout 2018 and most of 2019. Our Autumn 2020 survey showed Sydney surging back to a position of strength, with sales activity and prices rising, only to be sabotaged by the virus crisis.

The most visible manifestation of the Covid-19 downturn comes from the number of suburbs we classify as danger markets. These are locations where a decline in sales activity has coincided with a major blowout in vacancy rates, factors which have greatly impacted locations dominated by apartments - and 16 of the 24 danger markets are in the Sydney City and Parramatta municipalities.

The eight danger markets in the Sydney City LGA include Pyrmont, Ultimo, Waterloo, Haymarket, Forest Lodge, Chippendale and the Sydney CBD - while Glebe, Woolloomooloo and Erskineville are classified as declining markets.

The Parramatta LGA also has eight danger markets: Carlingford, Epping, Harris Park, Lidcombe, North Parramatta, Parramatta, Rosehill and Wentworth Point.

On the positive side of the ledger, there are precincts which are showing a high level of resilience – notably two municipalities in the south of Sydney, Georges River and Sutherland.

The LGA of Sutherland is the market leader in this coronavirus period, with three growth suburbs (Menai, Engadine and Miranda), five consistency markets and none classified as declining or danger. This precinct offers a great lifestyle based on water and national park access, plus lower prices than the suburbs of the inner west and north shore.

In terms of growth markets, quarterly sales in Engadine have been 42-58-73-76, while Menai sales have been 30-41-45-42-50.

The nearby Georges River LGA has two growth suburbs (Allawah and Peakhurst), three consistency suburbs and none classified as declining or danger.

Penrith is another standout, because of the high number of consistency suburbs and the absence of declining or danger markets. In the suburb of Penrith, quarterly sales have been 60-73-85-92-103-112, a pattern that has defied the broader trends.

In the more upmarket sectors, the Northern Beaches has two growth suburbs, (Balgowlah and Dee Why), six consistency markets and none ranked as declining or danger. Frenchs Forest and Freshwater rank nationally for their high level of consistency over several years, regardless of the broader market trends.

The Waverley LGA also has been quite steady, with sales in North Bondi quarter by quarter being 30-39-40-51-45-46-56.

Other upmarket precincts showing steadiness in the face of negative forces include the Woollahra and Ku-ring-gai municipalities.

Notwithstanding the destructive impacts of the virus crisis, Sydney has recently shown a notable level of resilience in terms of prices.

While only 25% of house markets and 27% of apartment markets have recorded annual growth in their median prices, 84% of house markets and 75% of apartment locations have delivered growth in the most recent quarter.

This reflects the recovery in prices that was under way as we entered the Covid-19 period and the strong price resistance shown by many Sydney markets during the shutdown phase.

Terry Ryder is the founder of hotspotting.com.au
ryder@hotspotting.com.au
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