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Sydney property market forecast for 2024 - featured image
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Sydney property market forecast for 2024

key takeaways

Key takeaways

Sydney home prices lifted 0.3% in March and are now only -1.4% below their previous peak in January 2022.

Buyer demand is absorbing an uplift in new listings hitting the market in Sydney, and auction clearance rates have remained high throughout the year showing the depth of buyer demand.

The Sydney auction market started the year strongly showing a significant depth of buyers in the market.

With vacancy rates at historic lows, rentals are skyrocketing in Sydney.

Are you wondering what’s ahead for the Sydney property market in 2024?

Well…Sydney’s home values will continue to increase, although a little more slowly than they did in 2023.

The surge in properties for sale in Sydney hasn’t yet slowed demand, with prices rising 0.3% in March and 9.6% over the past year.

Both buyer and seller confidence has increased with the thought that potential rate cuts could boost borrowing capacity, giving buyers more money to spend.

Here is the latest data on the median property prices for Sydney.

Property Median price Δ MoM Δ QoQ Δ Annual
All Capital city dwellings $1,139,375 0.3% 0.9% 9.6%
Capital city houses $1,414,229 0.3% 0.9% 10.7%
Capital city units $839,344 0.4% 1.0% 6.9%
Regional dwellings $728,036 0.4% 1.1% 4.0%

Source: CoreLogic, 1st April 2024

Although Sydney’s housing market has clearly turned a corner in early 2023 with prices rising steadily month-on-month, Sydney’s home values have yet to return to their peak last reached in January 2022.

According to CoreLogic, Sydney dwelling prices rose 25.4% from the onset of COVID-19 to their cyclical peak in January 2022 before suffering a 13.8% fall through to the January 2023 trough.

The latest data shows prices are only -1.4% below their previous peak… so a new records will be set soon.

Of course, there is no "one" Sydney housing market and some areas are strongly outperforming others.

It's a bit like having one hand in a bucket of hot water and the other in a bucket of cold water and saying: On average I'm feeling comfortable.

Sydney

Sydney’s listings are low

While Sydney property buyers are back in force, they are currently being cautious - their pockets are shallower and borrowing capacity significantly reduced.

But more investors are getting into the Sydney market now recognising that there is a current window of opportunity and that in 12 months’ time, the properties they purchased today will look like a bargain.

However, despite the overall caution, buyer demand is still strong which will continue to push Sydney’s property market through its revival.

Sellers are also coming back to the market with total property listings for Sydney marginally higher than in the same month last year, although the stock of older listings is slimmer so overall supply remains constrained.

Total Property Listings 08 April

Source: SQM Research

Sydney’s auction clearance rates are a good indicator of the depth of buyer and seller sentiment and auction clearance rates have been strong throughout 2024 suggesting more price increases are ahead.

Sydney Weekend Auction Market

While the data is insightful, as we know, Sydney’s market is not a one-size-fits-all property market.

There is a clear flight to quality with A-grade homes and investment-grade properties still in short supply for the prevailing strong demand, but B-grade properties are taking longer to sell and informed buyers are avoiding C-grade properties.

After all, some of the city’s suburbs are so tightly held that an available property for sale comes around once in a blue moon with homeowners holding onto their houses for as long as 20 years.

And areas in lifestyle or coastal suburbs are still in particularly strong demand as homebuyers wait to secure their dream property.

At Metropole Sydney, we’re finding that strategic investors are looking to take advantage of the window of opportunity currently available to them, while homebuyers are still actively looking to upgrade, picking the eyes out of the market.

While overall Sydney property values are likely to gain some more ground, like all our capital cities there is not one Sydney property market, and A-grade homes and investment-grade properties remain in strong demand and are likely to outperform, many holding their values well.

In other words, the various sectors of the Sydney property markets will be fragmented, which is a more “normal” property market.

Sydney’s rental markets remain exceptionally tight

Vacancy rates in Sydney’s rental market are traditionally very tight, usually hovering well below the national baseline.

But thanks to soaring demand and severe undersupply in the rental market, the national vacancy rate is exceptionally low today by historical standards.

SQM Research recorded Sydney’s vacancy rate has crept up a little to 1.7%.

By comparison, the vacancy rate which represents a balanced market is around 2-2.5%.

Residential Vacancy Rates 08 April

Source: SQM Research

This shows us that, like everywhere else in the country, Sydney’s rental market has plunged into crisis, with record-low vacancy rates, high rent prices, strong demand, and a rising population putting the city’s market into a pressure cooker environment.

And the data for vacancy rates and also weekly rent listings highlights that the distressing state of Sydney’s rental market leads to a bleak outlook for renters.

And at Metropole Property Management our vacancy rate is less than half the industry rate, in part because our clients have chosen investment-grade properties, but we'd like to think it also has a bit to do with our proactive property management policies.

Weekly Rent Listings 08 April

Source: SQM Research

Sydney has been facing a rental housing shortage for several years now.

This has led to increased competition for available homes, driving up rentals and making it increasingly difficult for many Australians to afford a place to live.

One of the aspects of the housing market boom during the pandemic was that it was driven by owner-occupier buyers.

And since Australia’s international borders in early 2022, Sydney has become a major recipient of new residents, both skilled immigrants and overseas students, putting extra pressure on the Sydney property market, particularly the rental markets.

Sydney's population grew by 2.1% in the 12 months to 30 June 2023, according to ABS figures.

The state is expected to gain a million new citizens over the next decade, principally from overseas, bringing the population to 9.1 million by 2033, data from the federal government’s Centre for Population suggests.

And this will only serve to put even more pressure on Sydney’s rental crisis.

Sydney2

Key trends that will shape Sydney’s housing market in 2024

The pace of value gains across Sydney’s housing markets was leading the nation in early 2023, but conditions began easing after a cyclical peak rate of growth in May when home values were rising at a monthly pace of 2%.

A sharp slowdown came amid rising interest rates, tightened lending, and worsening affordability at a time when advertised stock was above average.

Overall, the Sydney property market saw home values defy predictions in 2023 - prices are now up 11.6% since the January 2023 trough.

Greater Sydney’s median dwelling price climbed to $1.12 million over the year with more than 90% of suburbs increasing in value.

Domain data shows that the Sydney suburbs of Bungarribee, Quakers Hill, and Kings Park were among 36 Sydney suburbs where median house values surpassed the $1 million mark over the 12 months to October 2023, with each of their median house prices rising by more than 15% year-on-year.

More than 70% (or 401 of the 556 analysed) of Sydney suburbs now have a median house price that is higher than $1 million, up from about 65% the year before.

And unit prices in almost a third of 302 suburbs analysed hit seven figures, up from a quarter a year ago - Brookvale, Castle Hill, St Peters, and Zetland were among 18 suburbs where the median passed $1 million.

Meanwhile, a string of inner and middle ring areas joined the ranks of the $2 million plus club, which jumped to almost 170 suburbs, up from 140 in 2022.

Sydney's strong pace of annual growth is remarkable in the face of the substantial deterioration in affordability that occurred with the sharp rise in interest rates.

It is also a testament to the strong demand aided by the pick-up in population growth, and limited supply that offset the effects of higher rates.

And, likely, the lack of supply of good properties at a time of increasing demand from homebuyers and investors and strong immigration will push Sydney property values higher throughout this year.

However, the Sydney property market will remain fragmented with the more affluent suburbs where people's incomes are higher, and homeowners have substantial equity in their properties outperforming the cheaper suburbs which are being harder hit by the rising cost of living and interest rates.

Top 10 NSW suburbs where property has earned more than the average worker.

Property prices in New South Wales grew 9.6% over the last year and the top performers are all located in Sydney’s most affluent areas, but western suburbs also made the very top of the list.

The eastern suburbs of Bellevue Hill and Vaucluse saw the highest year-on-year growth in property values, with an average increase of more than a million dollars.

Meanwhile, in the inner-west regions, houses in Strathfield and Abbotsford saw year-on-year price growth of $447,417 and $401,327, respectively.

Also out west of the CBD is Oatlands near Parramatta, which earned $312,909 for the year, and West Ryde and nearby Melrose Park which notched up $305,455 and $301,676 in price rises respectively.

Further down the affordability scale, houses in Condell Park and Wiley Park in Sydney's southwest still outperformed the average Australian wage, growing by $99,953 and $98,507 respectively.

Top 10 property earners in Sydney

Suburb Region AVM 12 months ago Current AVM Change ($)
Bellevue Hill Sydney - Eastern Suburbs $7,917,472 $9,230,311 $1,312,840
Vaucluse Sydney - Eastern Suburbs $7,957,341 $8,980,058 $1,022,717
Dover Heights Sydney - Eastern Suburbs $6,137,873 $6,944,833 $806,960
Rose Bay Sydney - Eastern Suburbs $5,620,247 $6,125,406 $505,159
Strathfield Sydney - Inner West $3,114,452 $3,561,869 $447,417
North Bondi Sydney - Eastern Suburbs $4,083,836 $4,512,973 $429,137
South Coogee Sydney - Eastern Suburbs $3,375,920 $3,802,614 $426,695
Bronte Sydney - Eastern Suburbs $5,034,836 $5,448,932 $414,096
Abbotsford Sydney - Inner West $2,753,167 $3,154,494 $401,327
Clontarf Sydney - Northern Beaches $4,977,224 $5,378,500 $401,276

Source: PropTrack/realestate.com.au

Sydney’s housing market - the forecast for 2024

Sydney’s property market ended 2023 strongly, but signs of softer market conditions as the pace of price growth and clearance rates eased through the end of 2023 divides the experts on their 2024 forecasts.

Here are some of the most recent forecasts:

  • ANZ Bank forecasts Sydney property values could rise 6-7% in 2024
  • CBA forecast Sydney property values could rise 4% in 2024
  • NAB forecast Sydney property values could rise 5% in 2024
  • Westpac forecast Sydney property values could rise 6% in 2024
  • SQM forecasts Sydney property values could fall up to 4% in 2024
  • PropTrack forecast Sydney property values could rise 5% in 2024

Oxford Economics recently made the following forecasts of where Sydney house prices will be in 3 years time. 

Price Forecast

As buyers and sellers realise that we have reached a peak of interest rates and that inflation is coming under control and consumer confidence returns, buyer and seller activity will pick up.

So I currently see a window of opportunity to get into the property market before the crowd does.

If you look back at previous cycles, when the market turned property prices surged rapidly – look at what happened in the post-Covid property rebound in 2020 or in 2019 when the market suddenly turned after the Federal election.

Of course, those who acted then and purchased quality investment-grade properties are possibly of thousands of dollars ahead and have set themselves up for financial security.

The media are catching on to what’s happening and reporting more good news property stories.

This means the window of opportunity will close sooner rather than later as more homebuyers and investors into the market.

What we do know though, as I mentioned above, is that the flight to quality will continue so investment-grade properties in A-grade Sydney locations will remain in strong demand and are likely to outperform in the medium term.

You can read our Brisbane housing market update here.

About Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.
21 comments

Thanks Michael. You've mentioned family-friendly before, by definition I'd have thought that's mainly houses, then units for the rest: downsizers/retired, single people, young pros, investors renting to students etc. Are these good units to invest ...Read full version

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Keeping a close eye on the Sydney market from here in the UK. We bought an off-plan investment unit in Penrith for $605,000 in 2018, just sold it 5 years later for $715,000, would you agree that's not bad for a cookie-cutter unit (the type you do ...Read full version

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Hi Michael, Thank you a very insightful article with extensive factual information, it has been perfectly articulated. Homeowners have shown venerable resilience despite incredible mortgage pressures in 2023, despite these burdens the law of economi ...Read full version

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