There’s no doubt that 2023 has been a mixed year of surprises as the Sydney property market seemed to defy all odds. A strong start to the year saw an influx of first home buyers enter the market to take advantage of the stamp duty reforms. We also saw an increase in distressed sales especially in the unit market as owners could no longer afford their increased mortgage payments as well as strata levies and other outgoings. Many also chose to offload their investments in a bid to upgrade their own living arrangements.
During Winter and as is typical for this time of year, we saw a dramatic decrease in the number of listings resulting in an increase in prices as buyers were forced to heavily compete for what limited stock was available. If your home suits a Winter sale, it is a fantastic time to be selling despite popular belief!
As is typical for Spring, we saw a gradual increase in the number of listings and as prices increased, so did seller confidence. In some Sydney suburbs, the increase in supply reached a tipping point. Bordering on a buyers market, many in these suburbs were left with no option than to accept whatever they could get if they wanted to transact. Properties with the least amount of work to be done, on level blocks and with good access have been in the highest demand. Those properties with any less desirable aspects such as a busy road, steep driveway or too much work have been struggling to sell as buyers have more options to choose from.
So what’s ahead for 2024?
The outlook for our local economy in 2024 presents a complex picture, shaped by various economic factors and policy decisions. Here’s a breakdown of the key trends and predictions:
1. Price Growth Expectations: Economists from major banks anticipate a rise in house prices, ranging between 3% to 5% in 2024. This growth is driven by a combination of factors, including a lack of housing supply and potential interest rate cuts later in the year †. Another source suggests that Sydney’s house prices might rise by 4% †.
2. Rental Market Challenges: The rental market in Sydney is expected to remain under strain. A shortage of rental properties, driven by factors like lack of new developments and decreased investor activity, is leading to high rental costs and limited availability. This situation is exacerbating the affordability crisis for renters †.
3. Impact of Government Policies: There’s concern that government policies are deterring investors. For instance, policies like rent freezes or regulations around pet ownership for renters could be driving investment away from the rental market, thereby exacerbating the housing crisis †.
4. Market Conditions and Competition: Sydney’s property market experienced a slowdown in new property listings, leading to heightened competition among buyers across most suburbs. This situation is likely to continue into 2024, with potential buyers facing challenges in finding suitable properties †.
5. Interest Rate Dynamics: While interest rates are expected to increase once again in February, there’s a possibility of rate reductions as we move further into 2024. This could create a favourable window for entering or expanding presence in the Sydney property market †.
6. Population Growth and Demand: Sydney’s population growth, particularly driven by immigration and returning international students, is putting extra pressure on the property market. This demand is outstripping the current housing supply within close proximity to major CBD’s, leading to a competitive market with rising prices †.
7. Recession Probabilities: There are varying opinions on the likelihood of Australia entering a recession in 2024 due to the decline in real household disposable incomes and therefore consumer spending. This could affect various sectors, including hospitality and retail, which are predicted to face a tough start in 2024 †. A survey conducted by Finder places the risk of a recession at about 32% †. AMP’s chief economist Shane Oliver estimates a 50% chance of a recession starting late this year or early next year, while RBC Capital Markets’ chief economist Su-Lin Ong assesses the probability at about 40% †. However, the Australian property market is extremely resilient and expected to remain strong whilst supply remains limited.
If you are thinking of selling in 2024, the Sydney property market is definitely poised for more price growth, but this comes alongside challenges in the rental market and concerns over housing affordability. Timing is everything when it comes to selling your home and it really does depend on the type of property, location, aspect and local market conditions. Not all parts of Sydney move at the same pace so it really does come down to a case by case basis.
If you would like some guidance around when is the best time to sell for your own circumstances, feel free to book in a time to chat with us. Our help costs you nothing extra and we guarantee it will make an enormous difference to your overall outcome.
BOOK A CALL with Kathryn Fantov, our senior Vendor Advocate or visit our website at www.innovativeproperty.com.au.
