Sydney's quicker than expected price rebound was 2019 highlight: HTW Residential

Sydney's quicker than expected price rebound was 2019 highlight: HTW Residential
Sydney's quicker than expected price rebound was 2019 highlight: HTW Residential

At the beginning of 2019, Herron Todd White (HTW) forecast that the wider Sydney market would continue to weaken up until the state and federal elections, with a plateau post-election if other economic indicators remained the same.

In their December report, the property valuation firm found their predictions were accurate regarding the elections being a line in the sand.

What they didn’t predict however was the outcome of the federal election, which meant the well publicised changes to negative gearing and capital gains tax didn’t eventuate.

"It is likely that the market had already factored in these taxation changes, which meant that the election result kick started a more positive sentiment," HTW said.

"Agents anecdotally reported to us that within weeks of the election, their phones were once again ringing hot with renewed interest from both vendors and purchasers.

"Since then, an easing of APRA policy for residential mortgage lending along with three interest rates cuts has prompted a surge in activity in the first home buyer and upgrader markets."

HTW advised this has resulted in a much quicker than anticipated rebound in values in a number of areas, particularly those that experienced larger declines during the downturn.

"Given the above, we have marked ourselves a seven out of ten in regard to our start of year predictions."

The market recovery appears to be in full swing with CoreLogic reporting 5.71% growth in the most recent quarter across the Sydney metro area.

"However, it is important to note that year-on-year, RP Data is still recording a 1.58% loss to the median value," the report noted.

Interestingly, on a year-on-year basis (across the Sydney metro area) units are outperforming houses at +1.29% and -2.45% respectively.

The new unit market is probably seeing more of a mixed recovery with pockets of oversupply along New South Wales with well publicised issues around significant building defects and flammable cladding concerns.

The report noted it is almost 12 months since the Opal Tower was evacuated due to significant building issues.

Since then a number of other unit complexes, including Mascot Towers, have been identified as having significant building issues.

In addition to the building defects, approximately 444 complexes have been identified as having non-compliant cladding.

Settlement valuations were still a concern for a number of new unit complexes with values coming in lower than the off the plan prices agreed upon in a stronger market.

"Many of the units we were valuing in 2019 were purchased off the plan at around the peak of the market," the HTW valuers noted.

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Sydney Htw

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