Property experts Effie Zahos and Terry Ryder believe Sydney, Canberra and Darwin will be Australia’s top property performers in 2022.
The co-authors of Canstar’s inaugural Rising Stars Property Report joined KnowHow founder Bushy Martin on Realty Talk, which was also shared on the Get Invested podcast, to discuss the property market ranking of Australia’s eight capital cities.
At the top of the list is Sydney, which ranks highly on several metrics despite contradicting the views of some economists on the future of the housing market. While many factors come into play, restrictions from COVID-19 have caused a change in people’s movements.
“What I think to be true is that real estate hasn’t risen despite the pandemic. It’s actually arisen because of the pandemic. People who have been in lockdown and unable to travel overseas have been saving a lot of money and putting that into other renovations or into real estate investment. And that’s been a big factor,” Terry said.
Another main driver in Sydney, and other cities like Melbourne, is the infrastructure spending.
“Infrastructure spending is a massive influence. You might recall that from 2013 to 2017 there was a big boom in Sydney and Melbourne that didn’t happen anywhere else in Australia at that time. The infrastructure spend, I think, was the big reason. it’s really pumped up those economies and therefore the property market, as both Sydney and Melbourne were spending tens of billions of dollars on major infrastructure at that time and they still are,” Terry said.
“It’s ongoing in Sydney, and that’s one of the reasons why Sydney is continuing to be so strong. We’ve got multiple upgrades to the motorways, we’ve got tunnels being drilled, we’ve got universities and hospitals being built and expanded.
“It is tens of billions of dollars being generated into the Sydney economy at a time when it really needs it right now with the lockdown impacts. So, it’s allowed Sydney’s economy to remain strong and out of that has come a property market which has defied everything that the pandemic has been able to throw at it.”
Following on from Sydney is Canberra, which Terry refers to as the ‘Goldilocks’ of the Australian real estate market.
“It’s not too hot, not too cold, but just right. It’s steady and consistent,” he said.
“It’s a place where you’ve got this evenness of pricing and there’s actually really no cheap areas. Most of the capital cities (Brisbane, Adelaide, Perth) have all got really cheap places where people can buy at the bottom of the market, and then you’ve got your up-market areas. But Canberra doesn’t really have that everywhere.”
Terry also expanded on Canberra benefits from being the ‘public sector and government centre of the nation’. Therefore, while the average house price is more expensive compared to other cities, it’s still affordable for local residents.
“It’s because it’s got an unfair advantage as the national capital and the purpose-built city. It’s always got the lowest unemployment in the land, it’s always got the highest average in wages, and it’s usually got some of the lowest vacancy rates in the nation as well. Now it’s got this what I call the unfair advantage, and it’s always steady. It seldom seems to have outrageous bones, but it never busts,” he explained.
“There’s probably nowhere that’s under $600k in Canberra for houses, so it’s quite an expensive city. But at the same time, the people living and working there have the highest incomes in the nation on average, so people are able to afford it in those terms.”
Thirdly, Darwin’s property scene is buzzing after ‘nearly a decade in the doldrums’.
“Well, it’s really a major recovery phase and a number of factors feeding into that. The resources sector has improved, the state government is being proactive in trying to generate business and economic activity (and succeeded to a certain degree), and it’s got that lifestyle factor and climate factor,” Terry said.
“Also, one of the things anecdotally that we were hearing about was that people out of Melbourne were actually buying and moving up to Darwin, getting the hell away from lockdowns and going to a place where the climate throughout the winter is really warm and the lifestyle is more relaxed.
“So those have all been factors feeding into Darwin’s economy and therefore its property market. We’re seeing vacancy rates, which used to be high, come down to below 1%. Rates are rising strongly, more so than most parts of Australia, and sales activity has picked up. There’s been a high level of support from the Northern Territory government to first time buyers, and also lots of support for other buyers.
“There’s been incentives to build a home whether you’re a first home buyer or not. So those sorts of things have also been influential for Darwin.”
Listen to the full interview here.
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