“There were reports earlier this year that parental contributions averaged over $89,000, which represents an increase of nearly 20% over the past 12 months.
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“Other versions of this see parents allowing their children to pay no rent or pay dramatically reduced rental rates on parent-owned properties.”
At times, it was hard for anyone to keep up, as Sydney recorded the fastest annual rate of price growth on record, hitting a median house price of $1.5million, with apartments topping the mark. $800,000.
Today, residential real estate is now the largest asset class in Australia, worth an incredible $9 trillion, 38% of which is in New South Wales.
While in the 1970s a house cost seven times the average wage, it will now cost the regular buyer 12.5 times their median annual income, according to the latest ANZ CoreLogic report on housing affordability.
Homebuyers in Sydney will have to save for more than 16.5 years to raise a 20% down payment on a home after prices rose 30.4% this year.
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“I think the most interesting thing this year has been that my house has made more money than I have,” said Tim McKibbin, chief executive of the Real Estate Institute of NSW. “And I wouldn’t be alone there; there would be many, many people in the same boat.
“But everywhere everything is becoming unaffordable, and for many first-time home buyers, that Australian dream of buying their first home is increasingly slipping away from them, which is troubling.
“For many others, their mortgages are also exploding with the low cost of money.”
At the higher end of the market, prices have risen even faster, with the settlement of new-build apartment sales in Barangaroo cementing the CBD port foreshore’s place as one of the most prestigious addresses in the country.
New high-end developments such as the Résidences de l’Opéra also sold for record prices.
Lucy Macken, of The Sydney Morning Herald Title Deeds, said the CBD foreshore already had a foothold in claim historically through Bennelong Apartments – The Toaster – and again when the Opera Residences set a record at over $26 million with a purchase by philanthropist Robert Salteri and his wife, Kelly.
“Then a new record was set by a mysterious buyer who purchased the first three levels of One Sydney Harbor Tower from Lendlease for $140 million,” she said.
For homes, Woollahra has finally claimed a place in the Sydney trophy market. It was already an affluent eastern suburb but, given the nature of its historic housing, it had never entered that $20 million real estate market…until Kerri-Anne Kennerley got 22 million dollars for his house.
The sale of Rosemont to Woollahra for $45 million was a surprising sale for keen observers of prestige properties. Credit:Peter Rae
“It shocked real estate watchers,” Macken says. “As was the sale of Rosemont a few weeks later for $45 million by Margot, Lady Burrell, although this is more understandable given the size of the estate.”
Meanwhile, a new Midwest record was set by the sale for $25 million of a waterfront estate in Abbotsford by the Bowes family, who had owned it for nearly 80 years, while the beaches of the north broke with a $27 million purchase of Palm Beach.
A four-bedroom house at 22 Primrose Ave, Sandringham, has sold for $8.38million.
The North Shore recorded a $24 million sale in Northwood, the Upper North Shore a $16 million sale in Killara and $8.38 million was paid for a property in Sandringham in Sydney’s south.
The exodus from Sydney has been accelerated by COVID-19, with a rush to sea-shift and tree-shift destinations as well as outer regions and suburbs, as technology helps transition to remote working . It sent prices soaring in many key lifestyle hotspots, such as Byron Bay – which even overtook Sydney with a median of $1.55million – and sparked sharp rises in other favorites in NSW such as Orange, Kiama, Bellingen and Lismore.
“I never thought I would see the day when we were more expensive than Sydney,” says Glen Irwin, director of Byron Bay estate agency. “But now I expect it to continue. We’ve had so many people come here, and they fall in love with it, and they’ll never come back.
“And we have such a shortage of properties compared to cities like Sydney and Melbourne…prices will continue to rise as people find out how good life here is.”
Many people have also bought vacation homes with money saved from not travelling, with a recalibration of upscale values in traditional weekend areas such as Palm Beach, Dural and the Southern Highlands.
The exodus of Sydney residents to regional areas has driven up house prices in towns like Kiama.Credit: leerogers/iStock
“We’ve had a lot of people buying here from Sydney, and prices in the area have generally gone up around 25% as a result,” says Anita Roelevink, agent manager Stone Southern Highlands. “Then we saw a lot of people move here permanently.
“They have reassessed their lives and want to have more relaxed times and a village lifestyle in places like Exeter or Burrawang.”
Looking to 2022, most experts agree that the pace of price growth is likely to slow as much larger supply comes online, adding to a record number of consecutive listings.
“So in the summer and fall there will be better buying conditions, and people who missed out before might have a better chance next year,” says Dr Powell. “Demand will definitely slow down.”
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That will come sooner rather than later if interest rates rise towards the end of 2022 or if the Australian Prudential Regulation Authority (APRA) tightens regulations further.
As of last month, buyers’ borrowing capacity is to be rated at 5.5% instead of a lending rate of, say, 2.5%, and that could be tightened further.
“A lot of clients are now asking, ‘Is my borrowing capacity less?’ as a first question,” Roberts says. “This will likely hit first-time home buyers harder, as they typically borrow more than someone who is already on the market and moving on to their next property. But it could affect everyone one way or another.