The impacts of COVID-19 could potentially slow down the growth in Sydney's prime residential market, according to the latest forecast by Knight Frank.
Knight Frank's Prime Global Cities Index report showed that the Sydney prime residential market grew by 1.2% during the first quarter of the year.
Shayne Harris, partner at Knight Frank, said the COVID-19 outbreak would likely place pressure on prices starting the second quarter of the year.
"Housing markets across prestige markets in Australia remain in a state of flux given the restrictions on viewings and lower transaction volumes reflecting the uncertainty which has returned to the market," he said.
However, the slowdown might be mitigated by the easing of restrictions on open houses and live auctions in New South Wales.
"Most important will be how much confidence has been restored to the economy, and as a result, the impact of unemployment in five months' time when the financial mechanisms put in place by the government ease," Harris said.
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In a report in the Real Estate Conversation, Michelle Ciesielski, head of residential research at Knight Frank, said the COVID-19 outbreak might change the preferences of prime buyers.
"Some will want to be closer to the city with a minimal commute, and it's likely the more desirable locations will be as close to the waterfront or parklands as possible," she said.
Others, on the other hand, will likely go after properties in the coastal or countryside.
"The demand for waterfront property comes from a variety of buyers, ranging from an emotional purchase, to a sole financial purpose given waterfront properties are generally the most liquid within each market, especially in uncertain times," Ciesielski said.
Ciesielski projects prices in Sydney's prime residential market to record a flat growth or decline by as much as 5% this year.