Sydney’s property boom has been out of control for a long time, but the most rapidly growing prices in Greater Sydney aren’t in the city itself: instead, you have to go further afield.
The Illawarra region and Central Coast have seen their property prices skyrocket, their rental market overwhelmed and their mortgage brokers run off their feet as city residents move out, move in and buy up everything in sight.
“It’s been like this for year, since COVID hit but probably since the beginning of June when the lockdown lifted but the borders were closed,” said Karen Bashford, mortgage broker and general manager at South Coast Business and Financial Solutions. “Because we’re within three hours drive of a capital city – two, actually, being Canberra and Sydney – the place has gone crazy. Every weekend is like Christmas time, with visitors and holidaymakers. “
“COVID showed everybody that you can work from home and you don’t need to live in the city to work in the city, so as long as you are within 3 hours drive, you can make that quick trip up once our twice a week for a meeting and the other three days sit on the beach with a laptop and a phone.”
“We lived through the fires the months prior to COVID, so things were a bit crazy down here anyway, but then the whole world’s gone crazy now. My day to day is between 5 and 8 appointments, every day, every week.”
That accounts for the tree changers, but the issues at the coalface of Australia’s property boom go much deeper. Bashford explains how her business is dealing with low interest rates, and also how mortgage brokers are often being bypassed entirely by Sydney property buyers.
“A lot of ours is refinance, obviously, with the low rates,” she said. “We have 20 to 25% using the available equity, not to buy an investment here because the market is so crazy, but buying an investment in another area where there are good rental returns. People are taking the opportunity of their properties being worth a couple of hundred thousand more than they were a year ago to purchase another asset.”
“There are a lot of people purchasing down here from Sydney and Canberra, but they’ve got their own brokers in Sydney or buying purely cash. They’re ringing up from Sydney and offering $100,000 over list price without even looking at the property. The market is just going up exponentially.”
“I did a valuation in January to release a guarantor, then three weeks later, did another one to refinance: the same valuer did the valuation, they hadn’t done anything to it and the value went up $25,000, three weeks apart.”
“What we’re finding down here is that the buyers from Sydney are not all borrowing. They can sell their $1.5 million, 50-year old fibro house in Merrylands, pay off their $600,000 mortgage, come down here and buy a beautiful house for $7-800,000 for cash, put the difference in the bank, sit on the beach and get their Sydney income. Why wouldn’t you?”
“It’s not buying up investments, though that is happening, a lot of people are selling up and coming down mortgage-free and continuing their Sydney job because they can. Like I said, you’re only a three hour drive.”
The property boom in Sydney is also have unforeseen effects on the tight rental market on the South Coast.
“Everyone wants to come here on holiday. “People are buying investment properties because you could get something for under $700,000 that would rent for $550 a week, but they’re not renting them permanently. It’s causing a shortage of rental properties and we have so many families that are homeless because everyone is Airbnbing and holiday renting their investment properties.”
“They can get $1,000 a weekend with no wear and tear. People are at the club, the beach, shopping and they only sleep there, whereas it’s $550 a week for a family with all the wear and tear that comes with someone living in the house seven days a week. Why wouldn’t you do that as well?”
“But that is causing a housing shortage, which pushes up rent, which pushes up property values, because the rental return is better.”