Sydney real estate has had a rollercoaster ride the past couple of years. So what will happen in the new year?
Douglas Driscoll, as the chief executive of real estate agency group Starr Partners, is well qualified to answer that question.
Here are Driscoll's 12 predictions for the Sydney market in 2020:
1. Owners will continue to be shy
Supply will remain low, according to Driscoll, as owners wait to list their homes at the peak of the market.
"For this reason, Sydney property buyers might be rewarded with more stock at the end of 2020. Once this happens, prices will creep closer to their early 2017 levels – though won't quite reach them," he said.
2. Stampede of first home buyers in January
The federal government's First Home Loan Deposit Scheme starts on new year's day.
"While I stand by my argument that this was a pre-election gimmick by the Coalition Government to win votes, it will undoubtedly lead to an immediate stampede of first home buyer numbers in the first few weeks of next year," said Driscoll.
"This is a ‘first-in, best-dressed’ scenario, so I won’t be surprised to see first home buyer numbers slow once these spots are filled."
3. Prices to increase 5 to 10 per cent
The low stock will force prices up in Sydney, Driscoll said.
"House prices will rise between five and 10 per cent next year, depending on the suburb – if the political and economic environment remains stable."
Just three months ago CoreLogic reported supply was the lowest since 2010.
"Price rises might exceed 10 per cent if the Reserve Bank cuts interest rates again – as some are currently forecasting for the near future. Finally, as the banks now have their lending restrictions in place, I’m not expecting the bank regulator APRA to intervene in the short-to-medium term."
4. Days-on-market to tumble
Again, the shortage in supply will force the average duration of a property listing to reduce dramatically.
"Already in Sydney, the median days on market has shortened by seven days between August and September this year and will continue to fall," said Driscoll.
5. Scrutiny on building quality will continue
This year's Opal Tower and Mascot Tower crises will mean big consequences in 2020 for the construction industry. But Driscoll said the vitriol is better directed at the regulations rather than the builders themselves.
"There are significant changes ahead to increase compliance and enforcement in the building and construction industry and, I predict, even talks of a possible royal commission in 2020," Driscoll said.
The state government will enact the first batch of reforms to building laws in the new year, but it won't boost confidence for existing apartments.
"These reforms will only apply to buildings yet to be constructed, the problem of build quality will continue to make headlines… The rush to get apartments built and sold in the housing boom meant shortcuts may have been taken."
6. Houses will shrink
Australian free-standing houses used to be some of the biggest in the world, but they are now becoming smaller.
"The average size of a new house built in Australia was 228.8m² in 2018-19, down from 231.8m² in 2017-18 – which is the smallest since 2001-02," Driscoll said.
This is due to Sydney's geographical constraints, meaning new land is only available in the north-west and south-west corners.
Lifestyle changes have also shrunk homes, according to Driscoll.
"As a nation, we’re not cooking as much as we once were, and so the sizes of our kitchens are also getting smaller. With apps like Deliveroo and UberEATS at our fingertips, the focus is much less on cooking than it is on convenience."
7. New homes will be customised for specific demographics
The apartment building boom between 2014 and 2018 saw developers just build same old units with similar designs.
"It was easy for them to market off-the-plan properties months before building work commenced and keep them as fuss-free as possible. Mainly 2-bedroom, 1-bathroom, ‘no frills’ units," said Driscoll.
But with the boom over, developers have realised homes have to suit the target demographic – like downsizers or millennials.
"Downsizers, for example, are seeking terrace houses or single-story villas that offer low-maintenance lifestyles."
8. Refinancing boom
Historic low interest rates are luring mortgage holders to seek a better deal.
"Even a quarter of a percent saving on a mortgage rate can equate to thousands of dollars over the life cycle of a loan. As always, I recommend mortgage holders speak to an independent broker, as they have full access to the market and are impartial," Driscoll said.
9. Exurbs will grow around Sydney
Exurbs, as opposed to suburbs, are affluent neighbourhoods outside or on the fringes of metropolitan areas.
"They are fairly self-sufficient population ecosystems in their own right and have good infrastructure and amenities. In greater western Sydney, these are areas such as Box Hill in the north-west, and Oran Park and Menangle in the south-west," said Driscoll.
"I’m expecting a greater number of exurbs around Sydney [in 2020], and existing exurbs to enjoy continued growth."
10. House-sharing will grow
The UK term HMO – standing for "house in multiple occupation" – is fast-becoming prevalent in Sydney. It describes multiple unrelated people living in the same house and sharing common areas like the living room and kitchen.
"In areas of Sydney, particularly around its universities, more young people are choosing to live in such a manner and I’m seeing landlords looking to adapt their properties for this purpose," Driscoll said.
"This requires them to comply with additional regulations for the management and health and safety of the property and its occupants."
11. British and Hong Kong residents will buy in Sydney
The combination of a weak Australian dollar and the political turmoil in the UK and Hong Kong will see cashed-up buyers from those areas look to the Sydney market.
"A proportion of anti-Brexiteers and Hong Kong residents will look to the Australian property market as a safe-haven," Driscoll said.
"However, China’s Supreme Court this year introduced strict penalties for its citizens transferring money out of the country to buy property overseas, so unless Hong Kong residents are incredibly ‘creative’ they will face barriers to investing in property here."
12. Stamp duty to be reviewed
The NSW state government makes a lot of revenue from property stamp duty, collecting $8 billion at the height of real estate fervour in the 2016-17 financial year.
"However, as a result of the recent property market slump, the NSW Treasury has since suffered a fall in stamp duty revenue – revenue was $7.4 billion in 2018-19 and $6.9 billion in 2019-20.
"With property stock levels predicted to remain low next year, it’s in the interests of the state government to conduct a full review of its stamp duty model, and I predict these conversations will play a key role in state politics in 2020."