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By Swati Pandey
SYDNEY (Reuters) – Crippled by its tightest lockdown since the pandemic began, Sydney’s construction industry has slowed to a crawl, throwing many builders out of work, while shopping malls have shut – but the housing market has never been hotter.
That exuberance has stunned many as prices crack new records, with national home loan growth at its strongest in 2-1/2 years, compared to the gloom over Australia’s economic outlook cast by Sydney’s strict stay-home orders since June-end.
“The confidence in the market is very strong,” said Alex Pattaro, chief auctioneer for real estate agency Ray White Australia, who conducted seven auctions on Saturday and has more lined up.
“I have five auctions this coming weekend and we’re excited about them.”
Among his sales last weekend was a A$3.6 million ($2.6 million) house in the city’s northwest suburb of Ryde that sold at about 30% above the price guide.
Even though the coronavirus stay-home orders have forced all auctions online, 580 homes went under the hammer across Australia’s largest city on Saturday, with clearance rates of about 75%.
Market players say the pandemic curbs are feeding the frenzy.
“The question is…is this possibly the best market a seller could ever take advantage of?” David Murphy, principal of his eponymous property firm, asked clients in a newsletter. “Frustrated, and greying, locked-down buyers fuelled by rosé (wine) and desperation.”
In the beach suburb of Fairlight, where median home prices have jumped 21.7% to A$2.8 million, a three-bedroom home sold for A$4 million over the weekend, as more than 20 bidders in the inner west drove up the price of a four-bedroom home to A$2.5 million.
Buyer demand has remained strong while the number of properties on sale fell 40% in the first three weeks of July versus the corresponding June period, says Nerida Conisbee, chief economist at the Ray White agency.
That has kept auction clearance rates high, at above 70%, in recent weeks.
The pick-up in auctions and credit growth comes as median home prices in Sydney swelled 8.2% in the June quarter to an all-time high of A$1.4 million, or a rise of more than A$1,200 a day.
The gains extended into July, when Australian home prices jumped 1.6%, CoreLogic’s national home value index showed on Monday, with Sydney prices racing at 2% over the previous month to stand a startling 18.2% up from a year ago.
A prolonged lockdown, could prove a damper, however, amid forecasts of a third-quarter contraction in Australia’s $1.5 trillion economy. Already, the hit is evident in mobility and credit and debit card spending data from banks.
“With dwelling values rising more in a month than incomes are rising in a year, housing is moving out of reach for many members of the community,” said CoreLogic’s research director, Tim Lawless.
“It’s possible market activity could reduce through the second half of the year, helping to rebalance the market and take some heat out of the rate of house price growth.”
(This story refiles to correct paragraph 1, dropping errant letter “s”)
(Reporting by Swati Pandey; Editing by Sam Holmes and Clarence Fernandez)
