A chronic lack of housing supply has created a logjam in one of the key segments of Sydney’s property market, according to a leading buyer’s agent.
The outer suburbs of Sydney, which had previously been the entry point of local people into the marketplace and a key investment areas for generating rental supply, are now a battleground where wealthy investors are losing out to first home buyers.
“There’s different people with different amounts of money,” said Kate Hill of Adviseable. “In the Eastern Suburbs, you’re still getting a lot of offers at $2-3 million, and in Penrith, Liverpool and Blacktown, you’re getting people buying between $850,000 and $1.2m.”
“But we were in an auction for a client a couple of weeks ago, a property marketed in the low $700,000s guide price, and even the agent was amazed when the bidding went above $750,000 and it evidentially sold for $825,000. That’s $120,000 above what they were expecting.”
“That’s what is happening everywhere else where normal, non-transient, settled Australians live. They are the people buying right now because they have so much money. If you’re out in Penrith, buying at the most popular, in-demand purchase price range, and you’re up against as many as 25 other offers on anything that we’re offering on. It’s a nightmare.”
It’s not just Western Sydney property: where rental investors butt heads against first home buyers, first home buyers are winning out. The so-called mortgage belt, where APRA lending rules might see some first home buyers fail to get a home loan, is yet to kick in.
“Our investors are investing everywhere,” said Hill. “I’ve been buying in Geelong, in Adelaide – those markets are ridiculous too. It’s the same in Brisbane too, as well as Western Sydney and the Central Coast. Everywhere normal people live has gone bonkers.”
“If there are normal Australians, they’ve sat on their money for two years, done nothing and they have cash. The economy has gone OK, we had JobKeeper and some people have now got more than they did before the pandemic. People were fearful of spending money so they kept the cash and now interest rates are low, which contributes.”
“Owner-occupiers have cash to burn and there’s no listings. I’m being outbid by $120,000 out in Penrith, it’s like people have more money than sense. But people have this cash and they don’t care that the APRA regulations are coming in, they don’t need to borrow that much.”
“We need more listings. We need to give people confidence to sell and upgrade. What they have done by stopping people being able to borrow money might well make them more fearful about upgrading and therefore they don’t sell. We see that already in the renovation boom.”
“We need to make people more confident in the economy, in their jobs and the future in general so that they put their house on the market and upgrade. We need more listings and building new ones isn’t always the answer.”
“If we had more supply, it would give us more choice, and it would make the person paying $120,000 over guide move somewhere else. Give us more supply and it won’t happen.”
