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Sydney Property Market: How does the Coronavirus compare to the GFC?


Even amongst all the panic, history has shown that the Sydney property market is more resilient than you might think. Market share, recessions, sudden unemployment: none of it means that property values will instantly plummet. If you’re getting ready for another Global Financial Crisis, it might be time to get some perspective on the situation.

According to an analysis by Eliza Owen, head of research at CoreLogic, there’s been a 0.4% price increase in just under a month up until April 21. This is a slower growth rate compared to previous months, but still positive. Of course, this doesn’t mean that housing prices won’t be affected.

We’ll look at how the economy has been responding to COVID-19 in the wake of the shutdown, how it’s different from the GFC, and what you can expect if you’re in the market right now.

Sydney Property Market Impact: the GFC vs Now


To get a better sense of the market, we look to the rise and fall of interest rates. Before the GFC, we saw rising interest rates, more expensive mortgages, and eventually, falling home prices. The higher the rates got, the more the Reserve Bank controlled for inflation, but the overcorrection only added to the perils of the recession.

In 2008, the national median home price fell by 0.8% in the first quarter and by 1.4% in the second quarter. By the third quarter, it fell another 2.1%. The Reserve Bank continued to raise interest rates during this time, hitting 7.25% by the third quarter — right before the GFC really hit full force in mid-September.

On April 27, 2020, the interest rates didn’t just fall below GFC levels but were at an all-time low with the S&P/ASX 200 benchmarks declining by 17.4% from its peak in February. The next day, a rally saw the share market index benchmark lift by 3.1%.

This only shows that although property values may fall in the next few months, it’s mainly a result of the market lockdown and does not affect their intrinsic value. From these numbers, one can say that the COVID-19 pandemic could look to have a shorter-term impact on prices and the Sydney property market as compared to the GFC.

House Prices: Stock, Demand & Competition


Before the GFC, interest rates were rising. Before the coronavirus, the property market was rising. Home prices plummeted in the first quarter of 2009 after interest rates were cut, but it didn’t take long for the market to grow from there. Right now, most home values have been stable, although amidst fear, lockdowns, and salary cuts though, luxury home prices have fallen.

Despite the market’s elasticity though, we could expect to see home prices affected continue to fall.

  • The lack of in-person inspections and auctions
  • Uncertainty of buyers to make timely payments
  • Potential negative GDP growth and a rise in unemployment

With social distancing laws in place, the market has seen the number of property transactions fall dramatically. Fewer auctions mean fewer clearances and more homes sitting on the market. Despite emergency rate cuts and quantitative easing, we’re not expecting home prices to remain as high as they are. This can mean the current market is well-suited for homebuyers who are looking for the right time to invest in high-end properties at a lower price. 

First Home Buyer Behaviour


In the time of the GFC, as house prices fell down, few people thought it was the right time to buy with banks facing a string of difficulties and a shortage of mortgage customers. But with the current pandemic, the outlook for the home property market is more positive with house prices moderating in the past few months. Lending requirements have also eased up today to encourage more people to get into the housing market. 

Buyers and sellers today are attempting to forge on even with the current restrictions by marketing and communicating more online. But even with the more aggressive virtual measures, we’re seeing a slow down in the momentum of first-home buyers.

This is where consumer confidence really comes into play. People who are working may worry about being laid off. Buyers who are confident that they can survive a recession may want to wait until the market falls even further to secure a better price.

No one expects the housing market to be impacted the way the share market has been hit — the latter is always more unstable than the former. In addition, some experts have proposed that this is a short-term setback in terms of home prices that can be recovered faster than people may think.

Auction and Clearance Rates


The share market took a loss of 55% during the GFC, while property values took a 7.6% hit. But experts like Brendan Coates of the Grattan Institute have remarked that the slow-down with the GFC was much more gradual compared to coronavirus.

He likened it to the economy moving along smoothly on a highway before hitting an unanticipated wall in the form of coronavirus. Until we start to see coronavirus slowing down, there’s unlikely to be recovery signs in the form of stabilised banks and loosened credit restrictions. Today’s problem is a supply-side shock as opposed to a demand shock.

Today, the coronavirus pandemic has brought auction and clearance rates to record lows, dropping clearance rates in Sydney to 37% and Melbourne to 35% as of Q1 2020. With social distancing measures heavily enforced in most cities, property buyers have had to adopt alternative methods to traditional auctions such as virtual tours and the use of videos to help sustain the property market. 

Looking Ahead


The Sydney property market has seen some serious crashes over the past few decades, but it can bounce back when it stands to consider past lessons. If we don’t know how long the social distancing rules will be in place, there are few ways to anticipate how the property market will react. 

If you’re thinking of buying your first home then now is the best time to find properties at low to moderate pricing. And if you’re a homeowner, now is a great time to refinance your mortgage, so you can take advantage of lower interest rates and access to more flexible loan features. 

Shore Financial: Financial Security in Uncertain Times


While there isn’t a lot of certainty during COVID-19, there are a lot of opportunities if you’re in the market right now. You may just need to dig a little deeper to find the advantages. 

If you’re looking for help during this time, Shore Financial is here to give you the advice you need to make more informed decisions. Whether you decide to make a move in Sydney or wait it out, we can show you what it means to balance your finances and investments for the best possible outcome.

Get in touch with Shore Financial today and maximise your opportunity through property!




  • Levels 3 & 4, 153 Walker Street
    North Sydney, 2060

  • 1300 416 700

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