- Experts unveil how different SA3 regions will perform.
- Subdued levels of price growth have been forecast.
- Elevated demand to remain a prominent feature of the market.
Sydney house price forecasts issued earlier this month predicted a moderation of home values across 2024. While home values are expected to grow between 3% and 10% by the end of this year, Sydney dwelling prices are expected to see growth drop by about four percentage points next year.
“We always found the forecast of 8% price declines in 2023 too aggressive. We’re glad to see the bears recognising reality. The Australian market is in much better shape than most analysts give it credit for,” Juwai IQI co-founder and group managing director, Daniel Ho, told The Property Tribune.
Property expert and buyer’s agent, Lloyd Edge echoed the sentiment, telling us:
“I was not surprised to see many of the major banks backflip and revise their price forecasts, with National Australia Bank (NAB) revising their original prediction of a 4% decline for home values to ending 2023 with a 4.7% increase in home values.”
Lloyd Edge, Aus Property Professionals
“There is a lot of strength still in the property markets, despite the rising cost of living, and the uncertainty on where interest rates will land. We haven’t even hit spring yet, where we expect more stock on the market and increased activity with buyers wanting to close a deal before Christmas. There is a lot of international migration to the capital cities which is putting more fuel in the already hot property markets.”
PropTrack’s Sydney forecast was for between 3% and 6% dwelling value growth for December 2023, and between -1% and 2% change for December 2024. Westpac’s projection was for 10% growth this year, with reduced levels of growth in 2024 (6%) and 2025 (4%).
UPDATE: The Reserve Bank of Australia’s (RBA) September decision to hold rates for a third consecutive month has been widely expected to instil more confidence in home buyers and investors. See more on how the latest rate decision will impact the market here.
UPDATE: Australian real estate is now worth $10 trillion again, having previously hit the mark in June last year. This is largely due to a growing median dwelling price and more homes on the market. The median is now $732,886, while the number of dwellings is around 11 million.
Will the demand and supply imbalance be resolved soon?
“The market’s most significant influence at the moment is the huge imbalance between supply and demand, and this will not change in the short term,” REINSW CEO, Tim McKibbin told The Property Tribune.
“Despite all the politicising, until new supply additions are on the ground, prices will continue to be buoyed by the severe shortage of housing stock, which is being exacerbated by factors like population growth including immigration.
“Stability in the interest rate environment will support the confidence of those with the means to make a purchase, however, the gap between those who are and who aren’t in this position is widening, especially as the cost of renting goes up,” said McKibbin.
Real estate agents on the ground told The Property Tribune a sense of desperation is also in the air.
James Pratt Auctions Group CEO, James Pratt, said the driving force keeping the property market consistent right now is the low level of listings on the market.
“It has been like this all year. Buyers have far fewer properties available to inspect or compare.”
“I can’t tell you how many buyers I have seen at auction saying that the property isn’t exactly what they’re wanting, but because they don’t have much choice, they have registered to see what happens.”
James Pratt, James Pratt Auctions Group
“Often the Sydney property market will have highs and lows such as summer and autumn, but, this year, listings levels have been low since January,” he added.
Besides low stock, Pratt said the weaker Australian dollar has also encouraged international investors to consider purchasing in places like Sydney.
“I just auctioned an apartment in North Sydney that had six registered parties, and five of the six were from overseas or purchasing on behalf of someone overseas.
Buying makes more sense for international students
Plus Agency’s executive partner, Fiona Yang, told The Property Tribune that an underestimated buyer group is international students from China and their families.
“About 25,000 Chinese students were enrolled in Australia but lived in China and studied remotely.
“However earlier this year, the Chinese government announced these students must attend in person in Australia if they want the Chinese government to accredit their degree. So, lots of students have come from China this year to complete their courses,” she said.
“Their parents can’t find rentals that are both affordable and available, in part because landlords prefer tenants with local income rather than foreign students. Their parents do a calculation and decide they may as well buy an apartment rather than pay the mortgage for someone else. It will cost a little more, but it will be theirs. The parents are still in China, of course, so they tour the properties by video call.
Yang predicts that house and townhouse prices will climb further while prices for small apartments of 1 or two bedrooms will remain flat or fall.
“The buyer today is purchasing for occupancy and wants more space. Also, for investors, capital gains on larger homes are better than smaller ones.”
Which Sydney markets are predicted to be winners?
Suburbtrends‘ Kent Lardner provided The Property Tribune with in-depth insights into five groups of SA3 regions in Sydney.
The first group of regions are set to ‘sizzle’ and include Carlingford, Leichardt, and Canada Bay.
“With less than 2 months of inventory forecast for Q4, these areas are positioned for growth between 1% and 4%, signalling a robust end to the year’s property trends,” said Lardner.
Steady development can be expected for the second group of SA3 regions, with Lardner forecasting inventory of two to three months, coupled with an estimated growth rate of 0% to 3% between now and the end of the year.
“[This] indicates a stable yet opportunistic environment for both investors and homebuyers.”
This second group includes Cronulla-Miranda-Caringbah, Camden, Warringah, Pennant Hills-Epping, St Marys, Sutherland-Menai-Heathcote, Marrickville-Sydenham-Petersham, Blue Mountains, Baulkham Hills, Sydney Inner City, Botany, and Mount Druitt.
The third group of SA3 regions are predicted to be “a blend of opportunity and unpredictability.” Inventory for these markets is predicted to be between three to four months and may witness values ranging from a 2% decline to 3% growth over the next six months.
Regions included in the third group: Dural-Wisemans Ferry, Pittwater, Hawkesbury, Fairfield, Eastern Suburbs-South, Richmond-Windsor, Campbelltown (NSW), Merrylands-Guildford, Penrith, Blacktown, Parramatta, Bankstown, North Sydney-Mosman, Ryde-Hunters Hill, Ku-ring-gai, Canterbury, Strathfield-Burwood-Ashfield, Wollondilly, Chatswood-Lane Cove, and Manly.
The Sydney property market enters an intricate phase with the fourth group of regions, including Auburn, Hornsby, Kogarah-Rockdale, Eastern Suburbs-North, and Hurstville.
“Currently perched on a delicate equilibrium, these markets are considered balanced, favouring neither seller nor buyer. Based on prevailing trends, inventory levels could settle between 4 and 5 months by year’s end. However, this stability is finely poised, and a modest uptick in demand could swiftly tip the scales back in strong favour of sellers.”
The final group of Sydney property markets include Liverpool, Blacktown-North, Bringelly-Green Valley, and Rouse Hill-McGraths Hill.
“Characterised by high inventory levels, these markets operate differently from conventional housing segments, as stock is often controlled by developers, muddying the correlation between inventory trends and price trends. The unique dynamics of these markets defy typical analysis, particularly as they encompass a mixture of new and secondary (not new) stock,” Lardner said.
How will Sydney’s property market finish in 2023?
Edge gave The Property Tribune three predicitions for how the year wrap up:
- More stock will come onto the market as sellers are ready with the mindset of ‘sell before Christmas’.
- More buyers will emerge onto the market, both locally and through the increased international migration. Although there will also be more stock, the stock is likely to sell faster as typically the ‘days on market’ are shorter in the warmer months. Investors will need to be quick on a good deal, and home buyers will need to put an offer on fast to secure a premium property or be prepared with a strong budget at auction.
- We are expecting more auction campaigns, as typical in spring months because it is nicer weather to be outside enjoying the sunshine and spring auctions have a lot more excitement as locals who are walking by often stop to watch all the action. Sellers hope that this excitement will help to push the sales price.