Covid lockdown pushes Sydney house prices up $20,000 in one month

The average price of property for Sydney units, houses and townhouses increased last month by about $20,000. Here’s why.

Sydney home prices have continued to grow even during lockdown.

The average price of property, based on sales of units, houses and townhouses, increased two per cent, or about $20,000, over July, CoreLogic’s hedonic home value index showed.

The typical value of a Sydney home was $1.017 million at the end of July, 18.2 per cent higher than it was last year.

CoreLogic research director Tim Lawless said buyer demand was stoked by record low interest rates and the prospect they would remain low for an extended period.

There was also a mismatch between buyer demand and the supply of properties available for sale, Mr Lawless said.

New listings across the Sydney area have dropped 30 per cent since June 27 and the total number of active listings was nearly 14 per cent lower than the five-year average, CoreLogic noted.

“With buyer demand so strong and active listings well below average, prospective buyers are likely feeling a sense of urgency due to the level of competition in the market,” Mr Lawless said.

The pace of house price rises in Sydney may slow throughout 2021.

He added these conditions were observed in earlier lockdowns and would diminish as restrictions were lifted.

Mr Lawless further noted that the 2 per cent lift in values over July, while high by historical standards, was well below the 3.7 per cent increase recorded over March.

He said he expected the pace of price rises to continue slowing throughout 2021.

“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,” he said.

“Worsening affordability is likely a key contributing factor in the slowdown here, along with the negative impact on consumer sentiment as the city moves through an extended lockdown period.”

Another factor likely to help cool the market was the absence of much of the earlier Covid-19 fiscal support – particularly fiscal support related to housing.

Growth in house prices was larger than that for unit prices over July. House values climbed 2.1 per cent, while unit values increased 1.6 per cent.

With a median price of $1.26 million, Sydney houses were an average of $312,000 pricier than in Melbourne and close to double median prices in Adelaide, Perth, Darwin and Brisbane.

With a median of $810,000, Sydney units were pricier than houses in every capital outside of Melbourne and Canberra.