Sydney property buyers are in for a slightly better year, but renters will still tough it out in 2024. Image: Canva, edited with AI.
Another cash rate rise in 2024 is unlikely to turn the market south.
One expert predicts a 5% fall in Sydney property prices by the end of 2024.
Renters to continue turning to home owners instead due to soaring rental costs.
The Sydney property market mostly led the price rises across 2023. The increases in Sydney’s house prices were all despite the headwinds of inflation and soaring interest rates.
According to SQM, Sydney property prices recorded an annual rise of 9.1%.
Sydney’s weekly property prices
The Sydney rental market saw thousands slog it out, as the local rental market solidified itself in favour of landlords; Domain reported a median rent of $700 in June and vacancy rates also hit record-lows of 1.18% in September.
A chronic undersupply remains the key driver behind the various cost and vacancy rate challenges.
Real Estate Institute of New South Wales (REINSW) CEO, Tim McKibbin, exclusively confirmed to The Property Tribune that a meagre amount of supply is hitting Sydney’s housing market.
Tim McKibbin. Image: Supplied.
“In October, it only grew by 144 properties across the state.”
“We have a desperate shortage of property, we have an increasing population; we’re in a market where people have to buy.”
What are experts predicting for 2024? The Property Tribune consulted a range of experts including McKibbin; and Ray White CEO, Tim Snell.
While many experts were holding out hope that 2023 would be the end to cash rate hikes, sticky inflation may temper those hopes.
With potentially another rate hike to go, McKibbin opined that while such a rate rise could help cool the property market, the effect is unlikely to be significant.
“We’re seeing how the property consumer has dealt with 13 rate rises, and it’s still grown despite 13 rises.”
Tim McKibbin, REINSW
“So if we get another one, I don’t think that’s going to turn the market south.”
McKibbin added that high immigration numbers were likely to offset much of the negative effects of any further interest rate rises.
Ray White CEO, Tim Snell, concurred that homeowners were showing venerable resilience amidst the incredible mortgage pressures. Snell noted homeowners were rising to the challenge with a mix of savings and capital growth from previous years, aiding in covering the increased costs of servicing a mortgage.
Tim Snell. Image: Ray White.
“Whilst predictions for interest rates softening continues to get pushed back late into the year – and potentially even until 2025 – the under supply of housing is not keeping up with demand.”
“Historically speaking, whenever interest rates soften, prices rise. Many punters may fight to ‘time’ the market and get in before this potential uplift in prices and confidence.”
Snell added that there is little doubt that homeowners will be forced to bare the burden of the current economic state for a while longer.
“However, the sway of supply and demand is still in their favour.”
Sydney rental market pain continues
Experts forecast that rental pain shall continue to beget homeownership, as mortgages remain more sensible than rental costs in some circumstances.
“The lack of supply chain of new developments, alongside the slow down in investor activity, is making the availability of rental properties still an issue.”
Tim Snell, Ray White
McKibbin agreed that next year is set to be brutal for Sydney renters.
“The rental market in particular is going to be tough; people trying to find a property, that’s going to be very hard.”
Sydney’s weekly rent
Is bad policy driving investors away?
Speaking on the subject of deterred investors, McKibbin opined that the State Government is espousing policies that are further disincentivising investors, to the detriment of Sydney’s housing market.
“When we see governments forcing landlords to accept pets, that means it’s very difficult for someone to recover the position of their property,” he said.
“We’ve got some politicians saying we should have rent freezes – it’s driving investment away, that’s the problem.
“And we’re seeing that now, we’re seeing people sell their rental property.
“If you treat landlords as anything other than an investor in a market, then, you will drive people away.
“An increasing population and a decreasing amount of investment in the residential space. That’s a big problem. It’s going to be the worsening of a crisis.”
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View our Melbourne property predictions for 2024 here.
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