North Shore house prices have many families torn between a fear of missing out- and a fear of over-paying! After what can only be described as the most surreal quarter of Sydney real estate, we are starting to notice some signs of the market shifting gears. Henny Stier, Buyer’s Agent from OH Property, offers her insight into North Shore house prices in 2021.
Sydney house prices are so high that many are wondering when North Shore house prices are going to crash. If you’ve been following North Shore house prices and you’re worried about overpaying for a property, but also scared of missing out, this may help.
Here is our on-the-ground observation of the past couple of weeks:
1. Auctions are going strongly
Most auctions are still going very strongly – we don’t expect North Shore house prices to crash anytime soon. However, quite a number of properties have sold just a day or two before the auction date. This may indicate less interest than in initial weeks, or the presence of one stand-out buyer in the end, which might suggest a better outcome can be achieved by doing a deal prior. Fear of Missing Out (FOMO) is slowly being replaced by Fear of Over Paying (FOOP)!
2. New listings increasing
The number of new listings has gone up dramatically and we expect this will continue in the coming weeks. Especially now that the school holidays are coming to an end.
3. Vendor expectations and greed are at an all-time high
Every agent we speak to is having a hard time managing their vendor’s expectations – which seem to increase exponentially week by week! These are vendors who have seen a neighbour’s property sell for a ridiculous sum at auction and automatically assume their property is superior (even when it’s clearly not!) and therefore should get even more.
4. Vendors are inflating the figure they expect to sell their property for
They’re factoring in the amount they predict will be needed to make their next move. “I know my house is currently worth $X; but the market might go up another 15% in the coming months when I will be buying, therefore I won’t sell my house unless I get $X + 15%.”
5. Buyers are feeling fed up & taking a break
Many buyers are feeling horrified, fed up and priced out. Therefore, many are taking a break from house hunting. Even those who still want to buy but can no longer afford the area they want to be in, are calling time-out for now as they wait for the craziness to settle down. A dramatic rise in North Shore house prices of 20-25% in 6 months is just not sustainable no matter how you look at it.
6. Panic Buying & Overpaying in the last few months
Q1 this year was characterised by panic buying and massive overpaying just for the sake of buying something. We expect Q2 to be a period where agents have to try and bridge the widening gap between astronomical vendor expectations/greed and decreasing number of buyers who are prepared to pay anything. The most desperate of buyers have bought in Q1. There will still be some really desperate buyers – but each week that goes by, there are less and less of them. Those who are still looking will have a lot more properties to choose from in Q2 and Q3 – reducing the pressure to pay big bucks.
7. More ‘lemons’ on the market
As soon as the number of listings go up, the lemon properties will no longer trade so swiftly or at such high prices. There is an influx of lemon properties on the market at the moment. Many of them were only bought recently and the owners are keen to off-load them quickly while the market is still hot and buyers aren’t as discerning. Once buyers have more choices, the lemons are going to sit around or get passed in at auctions.
8. Incorrect perception of the ‘market not holding up’
As more and more properties get passed in or withdrawn from auction last minute (due to the gap between vendor expectations and buyers’ willingness to pay up), there will be the perception that the market is not holding up. This won’t necessarily be the case – but in real estate, perception (or rather mis-perception!) can be a very powerful driving factor.
9. International buyers will re-enter the market after Covid restrictions ease
Another surge (who knows how long it will last – my guess is only 3-6 months) can be expected once international borders re-open and Australian citizen and residents can return with ease. We are already seeing glimpses of the strength of returning expat buyers who have managed to come home. Many have lost their jobs and cushy packages overseas but have saved up lots of $$$ over the years. Many are buying with very little mortgage, so threat of an interest rate rise doesn’t concern them as much and won’t really impact on their buying power.
10. Newcomers will be attracted to Australia
Once international borders re-open and immigration resumes, many newcomers will be attracted to Australia which is seen as a safe haven legally, politically, financially, and now health-wise also! However, aside from possible travel bubbles with a handful of neighbour countries, borders may not re-open fully in 2021 due to vaccine roll-out delays, etc. Certainly, at this point in time, it does not seem likely that international borders would reopen in Q2 or Q3. Our advice to anyone looking to sell is to do it sooner rather than later while there is still a surplus of highly motivated buyers.
If you’re tossing up between your property options for 2021, these observations may help you!
Overall, our advice to anyone looking to buy has been pretty consistent. Focus on buying only A-grade properties which will stand the test of time. The more inflated the market is, the more you have to be careful with whose advice you trust and what you buy. If you overpay for the wrong property, you will be stuck with an asset that will underperform in the future and that you won’t be able to easily recoup your money from if you want to sell it for whatever reason.
More on North Shore house prices:
- North Shore property prices: Staying cool when the market’s hot
- Five reasons why YOU make a good property investor!
- Going rogue: Why some agents refuse to give price guides
- The Challenges of Buying and Selling Prestige Properties
- Selling your home: To auction, or not to auction?
- Don’t buy a lemon! What to look for in a property