Sydney apartment insights: What happened to Sydney apartment values in September?
Sydney apartment values continue their solid and consistent growth pattern shown over the last few months, posting further 1.5 per cent gains over September, property data firm CoreLogic's monthly index found.
The gains follow 1.4 per cent growth in August and 1.6 per cent in both June and July.
Values are now 13.1 per cent up over the year to date, the second best performing market behind Hobart and Darwin. Sydney's rolling quarterly gain now sits at 4.6 per cent.
Over 2020, values were down -0.2 per cent.
At the start of 2021, the median apartment value was $733,000. It's now approaching $100,000 more, currently at $824,000 with no signs of slowing down as international and national borders look to open up.
The gains in the apartment market were only slightly behind the two per cent gains in the housing market, predominantly a higher growth asset.
But the housing market is continuing to become more unaffordable, which is pushing buyers out of the housing market and toward apartments.
“With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first home buyers," CoreLogic's research director Tim Lawless said.
"Sydney's median house value is now just over $1.3 million. In order to raise a 20 per cent deposit, the typical Sydney house buyer would need around $262,300."
A 20 per cent deposit for an apartment at the $824,000 median is around $100,000 less.
Despite the prolonged growth of dwelling (houses and units combined) prices, the growth has eased back slightly from the peak growth rate in March nationally dwelling values increased by 2.8 per cent.
Lawless believes the slowing growth conditions are the result of higher barriers to entry for non-home owners along with fewer government incentives to enter the market.
"Existing home owners looking to upgrade, downsize or move home may be less impacted as they have had the benefit of equity that has accrued as housing values surged.
The number of owner-occupier first home buyer loans has fallen by -20.5 per cent between January and July, as the impact of the tapering of government stimulus continues to show.
Lawless notes that over the same period, the number of first home buyers taking out an investment housing loan has increased, albeit from a low base, by 45 per cent.
"This suggests more first home buyers are choosing to ‘rent vest’ as a way of getting their foot in the door,” Lawless said.
The September quarter saw unit values rising faster than house values across regional Australia.
"This is probably a reflection of stronger demand for downsizing options and holiday homes in popular coastal markets,” Lawless suggested.