Acute housing shortage in Sydney as owners opt against selling

EXTENDED lockdown has created one of the worst housing shortages on record in Sydney and fuelled a new explosion in home prices.

With roughly a third fewer homes available for sale compared to before lockdown, Harbour City home prices jumped another 1.8 per cent, or about $20,000, over August.

It came on the back of a 2 per cent rise in values over July and means a typical house now costs just under $1.3m, while units average $826,000, according to Corelogic’s home value index released on Wednesday.

Housing experts revealed lockdown pulled up the market, despite the weaker economy and rising unemployment, by smashing confidence among sellers.

Many homeowners who would otherwise have put their homes for sale decided to hold off listing, but buyers, spurred by low interest rates, remained active.

Corelogic research director Tim Lawless said it was difficult for first-time buyers to keep up with the extreme price rises in these conditions.

“Housing prices have risen almost 11 times faster than wages growth over the past year, creating a more significant barrier to entry for those who don’t yet own a home,” Mr Lawless said.

Total growth in Sydney house prices was 26 per cent over the past year – at this time last year, a typical house cost $1.07m. It’s now more than $220,000 higher.

Apartment price rises were not as extreme at 9.4 per cent for the year, but Mr Lawless said growth was beginning to catch up as more buyers became priced out of the house market and turned to units.

Real Estate Institute of NSW chief executive Tim Mckibbin said it was a seller’s market.

“Vendors have every reason to be confident and some may regret the decision not to list their properties now,” Mr Mckibbin said.

Real Estate Buyers Agents Association president Cate Bakos said it was the opposite with buyers – those who could afford to wait should consider delaying their plans until after lockdown restrictions were scaled back.

“There will be more listings once restrictions ease and it will make it easier,” she said. “At the moment, many of the buyers you’re up against are the ones who’ve missed out again and again. They’re frustrated and will often pay more.”