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The strong economic rebound from the depths of the Covid crisis, continued growth in property prices and positive indicators moving forward, all have investors looking very favourably at the Sydney real estate market.

New figures released by the Australian Bureau of Statistics reveal new housing loan commitments rose 4.9 per cent in May (the most recently available figures) to a new high of $32.6 billion.

According to the ABS, this increase has been largely driven by investor housing loan commitments.

“The value of new loan commitments for investor housing rose 13.3 per cent to $9.1 billion in May 2021, which was the highest level since June 2015,” ABS head of Finance and Wealth, Katherine Keenan, said.

“The value of investor loan commitments rose 116 per cent in the year to May 2021, after falling to a 20 year low in May 2020.”

“Investor loans equated to 28 per cent of the total value of housing loan commitments in May 2021, compared to 46 per cent in 2015.

“This reflects the very strong growth in owner occupier loan commitments over the last year.”

Real Estate Institute of Australia President Adrian Kelly said the significant increase in investor housing loan commitments showed investors were “back in force” and is an indicator of the “very strong interest market growth has generated in the past year”.

“Investors and first home buyers alike are diving into the market with the latter taking advantage of the current government incentives,” he said.

‘Remarkable market turnaround’

According to respected property data firm CoreLogic, national home values rose 1.9 per cent in June, pushing annual growth for the recently ended financial year to 13.5 per cent.

In Sydney that annual growth was 15 per cent.

“In May, the unemployment rate fell to 5.1 per cent, and the underutilisation rate fell to 12.5 per cent, the lowest level since  February 2013,” CoreLogic Head of Research for Australia, Eliza Owen said.

“Consumer confidence remained elevated  through June, although down from the recent April highs.

“Elevated savings accumulated through COVID-restrictions  last year, along with a more confident consumer sector, has  encouraged consumption of larger goods, such as housing. This has all occurred against a back-drop of continued low  mortgage rates, which is one of the most significant  demand drivers.” 

Ms Owen also noted: “Rent values continue to see strong growth, though gross rental yields are compressing. In the year to June, Australian rent values  increased 6.6 per cent; the strongest annual appreciation in rents since February 2009.”

In looking forward Ms Owen said the current growth in prices would not be sustained, offering more opportunities for buyers.

“Overall, the housing market has shown a remarkable turnaround from initial expectations around COVID-19,” she said.

“However, the housing market has clearly lost some growth  momentum. Persistently high housing value growth rates are  proving unsustainable, from both an affordability perspective, and renewed headwinds amid a lockdown in Sydney and other parts of the country.”

“The question is not what impact short lockdowns have on the housing market; there seems to be relatively little impact.

“Instead, outcomes for the housing market and industry will depend upon how long lockdown  conditions last across parts of the country, and whether some  of the institutional responses offered through 2020 are reinstated if an extended lockdown occurs.” 

If you’re an investor, first home, buyer, downsizer or rightsizer looking for a new home, please reach out to the team at Toplace and let us know how we can help you.


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