Sydney real estate hotspots: Suburbs see surge in home loan demand – realestate.com.au

A real estate arms race is developing across Sydney as agents report a surge of hopeful homebuyers seeking pre-approval for loans – a move that will fuel already fierce competition for property.

Data from New Loan Market Group showed that pre-approvals in many areas during the three months to October were double the level recorded in the same period last year.

Experts said pre-approvals were a harbinger of increased demand and indicated the market was about to shift gears as a new wave of buyers stormed the auctions and opened for inspections.

This influx of buyers is expected to lead to bidding wars and sharp price increases, with housing supply remaining low and construction activity yet to reach the pace needed to meet population growth.

Loan Market chief executive David McQueen said more and more people were fast-tracking their plans to buy a home due to interest rate cuts and changing market sentiment.

“There is a clear shift,” he said, adding that there was “increasing interest in the markets.”

Hurstville, in Sydney’s south, saw the highest buyer demand, with the number of pre-approved loans increasing 220 per cent annually.

Other areas with a notable increase in the number of pre-approvals included the northern beaches suburbs of Manly and Dee Why, along with the northern coast suburbs of Lavender Bay and North Sydney.

These increases have not been accompanied by any meaningful change in the number of homes for sale in these areas.

This house in Panania sold last week for $365,000 more than the price paid for the same place eight months ago. No renovation has taken place.

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City sales are already booming. PropTrack data shows prices in Greater Sydney have risen 5 per cent from a year ago, but increases have been significantly higher for certain properties.

Last week, a house in Panania, in Sydney’s south-west, sold for $1.94 million – $375,000 higher than the price paid in February. The owners have not renovated.

To the east, a house on Lion St in Randwick changed hands this month for $1.2 million more than its 2023 price – again without renovation.

A two-bedroom apartment on nearby Market Street sold earlier this month after a $100,000 renovation for $650,000 more than what the owner paid for it in November.

This Randwick home recently sold for $1.2 million more than the price the seller paid in 2023.

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Agent Angus Gorrie of Ray White Eastern Beaches, part of the team that sold the homes in Randwick, attributed the increases to buyers’ fear of “missing out”.

Federal government initiatives aimed at helping first home buyers, including the expansion of the First Home Guarantee Scheme this month, had spooked the market, Gorrie said.

The scheme allows first-time buyers to use a deposit of 2 to 5 percent, without having to pay expensive mortgage insurance from the lender, for purchases of up to $1.5 million.

“Everyone is terrified of how much the plan will increase prices around them and they want in before it happens,” Gorrie said.

“It means that $1.3 million homes are selling for $1.4 million and the sellers are then buying their next home for $1.8 million instead of $1.6 million, so that has a ripple effect on the market.”

Source: Credit Market Group.

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Shane Oliver, AMP’s chief economist, recently noted in a podcast that arming first home buyers with bigger budgets through the First Home Guarantee Scheme would only drive up prices.

“Prices are just going up… It’s ridiculous,” he said.

Two Red Shoes agent Rebecca Jarrett-Dalton said the scheme contributed to a renewed sense of buyer appetite.

“Even those who don’t participate can see that the policy without anything to increase supply will drive up house prices,” she said.

Matt Triolo, together with partner Marrietta and sons Maxentius and Marcello, sell their duplex in Sans Souci. Photo: Justin Lloyd

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“All the language from non-first home buyers is about avoiding price increases.”

She added that housing supply could not meet buyer demand.

“While the number of requests is at an all-time high, the big question is whether we will have enough inventory to meet this demand,” she said.

“The market is incredibly hot, and this could lead to a very competitive environment for buyers, with many homes selling for hundreds of thousands over their reserve.

“Buyers need to compromise faster and bid harder.”

Competition at the auctions was already fierce for buyers this spring. Photo: Max Mason-Hubers

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McGrath Sans Souci agent Bill Tsounias said many sellers were withdrawing their properties from auction just a week into their sales campaigns as they received lucrative private offers.

“To do this, you usually need a pretty high bid,” he says. “Some units have more than 40 groups when first open for inspection. However, it does depend on the property.”

Recent house hunters have revealed that their house searches have been a drag.

Matt Triolo was recently on the hunt for a larger home in Sans Souci and said he had to register for 15 auctions before finally getting an offer accepted on a property.

Each registration cost money in transportation costs and construction and pest inspection reports.

“I realized pretty quickly how much prices were going to rise,” he said. “It went pretty crazy.”

His previous home, a duplex on Napoleon St, will now be auctioned later this month.

“I underestimated how hot the market was,” Triolo said. “Many of the properties I liked sold for about $500,000 more than I expected.”