As 2020 draws to an end, the Lower North Shore property market looks a lot stronger than most people would have thought possible earlier this year. We explore why it withstood the worst economic impacts of COVID-19, what’s happening in the market right now and what to expect for 2021 if you’re looking to buy or sell in our part of the world.
Market strong in face of COVID-19
It’s not possible to mention anything related to 2020 without first mentioning COVID-19. The virus has affected almost every aspect of our lives. Who could have predicted at the start of the year that a pandemic would rage around the world, that our borders would be closed, that businesses would be forced to shut and that we’d all be locked down? Little wonder that, when the virus first struck, some economists were forecasting property prices to fall by as much as 32%.
But these forecasts proved wildly inaccurate. Sydney property prices have been remarkably stable during the year. In the year to 1 December 2020, they actually grew 3.7%, according to CoreLogic.
The Lower North Shore property market
Here on the North Shore, we fared better still. Realestate.com.au data shows that the average Mosman house price lifted almost 14% between December 2019 and November 2020. Apartments didn’t fare quite as well as houses, with the median unit price relatively flat over the year.
While Sydney’s auction clearance rate climbed to the mid-70s by the end of 2020, the Mosman Daily was reporting that auction clearance rates in our area were outperforming even this. For the weekend of 12 December, the Lower North Shore clearance rate was an incredible 92%, which is typically the sign of a rapidly rising market.
Here’s how key Lower North Shore suburbs performed over 2020, according to realestate.com.au data.
|Dec 2019 Median
|Nov 2020 Median
|Dec 2019 Median
|Nov 2020 Median
What’s behind the current market?
There are several factors combining to drive the current state of play on the Lower North Shore, including:
- Low interest rates. Record low interest rates - and the RBA’s announcement they probably won’t rise for some time - are encouraging buyers to bid strongly. This is less of a factor in the prestige market where buyers often pay cash.
- Low stock levels. Listings are at all time lows, although as we end the year the shortage of property isn’t quite as acute as it was at the height of the pandemic. This is driving greater competition among buyers.
- Better than expected economic conditions. Many people thought we would be a lot worse off at this stage. Australia’s economy is, thankfully, growing again and while many people have lost jobs, unemployment didn’t rise quite as high as most economists forecast.
- The quality of the Lower North Shore. The growth in the property market over 2020 has largely happened in bluechip areas such as the Lower North Shore.
- Downsizers and first home buyers. Both are in the market in big numbers. First home owners have had the most favourable conditions to enter the market in some time with low interest rates and several grants and schemes on offer. On the other hand, investors aren’t a significant factor in the market right now.
The prestige market in full swing
A lot of the real movement in the property market right now is at the premium end. We’re seeing strong interest in high-end family homes in Mosman and Cremorne and this has been a large part of the impressive price gains in these suburbs. Much of this is being driven by returning expats, who have decided now is the perfect time to return home.
The same is true for the luxury apartment market, where downsizers in particular have been behind the strong growth in the median apartment price rising in premium suburbs such as Cremorne Point and Milsons Point. The reality is there simply isn’t enough quality property to go around - particularly true for downsizers.
What to expect for 2021
As we turn the corner into 2021, there are a lot of factors that could influence the market - many of them in a positive way.
The NSW Government has announced it intends to overhaul stamp duty, replacing this upfront charge with a smaller annual tax. This is good news for local buyers and sellers and should encourage activity given that stamp duty often proves a deterrent to making a move. The current stamp duty on a median priced Mosman house is over $225,000.
In March, we’ll also see the end of government wage support in the form of JobKeeper and the JobSeeker boost. Hopefully, this shouldn’t have a direct impact on too many people in our local area - especially as fewer people are receiving support than the government first anticipated. However, it could have wider implications for Australia’s economy. So too could our current trade stand off with China.
Borders may also open some time in 2021, particularly as a working vaccine rolls out. We believe when this happens, Sydney property will be in even stronger demand as we’ve enhanced our reputation as a ‘safe haven’ from many of the world’s troubles. We especially believe this will have an impact on the top end of the market.
What this means for you if you’re buying or selling in Mosman and surrounds
For people considering upsizing or downsizing, our advice is simple: low stock levels and strong buyer interest mean this is a seller’s market.
If you’re looking to make a move be sure to act decisively. Those who take their time are missing out.
If you’d like to know more about the current market or receive a free appraisal of your home please feel free to get in touch.