What is Going to Happen to the Sydney Property Market during October 2022?

• Interest rates continue to rise
• Despite this, asking prices in Sydney have remained relatively stable
• The federal budget later this month may or may not have an impact, added Mr McKibbin

With interest rates rising last week, and no clarity on when they will stop rising, has made the future of the Sydney property market uncertain.

This, Real Estate Institute of New South Wales (REINSW) Tim McKibbin, is made worse given the unsteady macroeconomic conditions, although unemployment remains low.

“Rates have risen again as expected, adding to the cost of living pain being experienced by many across the country,” he noted.

“The market craves certainty and that might best take the form of the Reserve Bank being clear on the timing of its final rise in this cycle. Ideally, that will occur before the end of the year.”

Tim McKibbin, REINSW

“The increases to date are having an impact and the economic situation more broadly is tenuous. The Treasurer even declared the global economy a ‘dangerous place’ last week.”

Mr McKibbin noted that borrowers are factoring in higher repayments into their borrowing calculations, with this not changing into the immediate term.

“Mortgagees could do with a breather though.”

Is it all bad?

Despite the interest rate rises, Mr McKibbin said that while the real estate market continues to generate doom saying headlines, the actual market activity appears to be flying under the radar.

“That’s because it’s quietly tracking well. Clearance rates continue to hover around the solid 60% mark,” he said.

SQM Research data shows that asking house prices have remained relatively stable this week.

Sydney

“Strong results are being achieved as vendors are increasingly switched on to the new market in which buyers’ budgets are more constrained.

“This latest rate rise and the potential for another lift next month should see this trend continue.

“But consumers will increasingly demand an end to the rate hike cycle and an opportunity for the dust to settle.”

Recently, CoreLogic released data for September showing that prices declined at a slower rate compared to August.

While the rate rise will maintain downward pressure, Mr McKibbin expected the settling of prices to continue to play out.

“It invites questions as to where we are in the cycle. The answers to such questions are only evident in hindsight but there’s a case to be made that we’re at or near the bottom,” he said.

“If that’s true, property owners should feel comforted. The value of their main asset is up substantially from pre-pandemic times. Systemic undersupply is on their side.

“On the other hand, there’s little comfort for aspiring first home buyers. The ability of this cohort to compete for available properties has been compromised by higher rates and for many, spiking rental costs.

He noted that predictions made in winter of a mild pick-up in activity this spring are proving generally sound,.

“Auction volumes bounced back last week after the week prior was impacted by the Grand Final and the long weekend. There’s little to suggest there’ll be any major shifts as we approach the end of another year.

“If anything, and despite various significant economic factors playing out nationally and globally, the biggest variable in the NSW housing market right now appears to be the weather.

“Time will tell what impacts if any the budget later this month will have.”