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

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.

Sydney’s property prices rose 0.2% in January 2024, according to CoreLogic data, to a new capital city median of $1.122 million.

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

Property Median price Δ QoQ Δ Annual
All Capital city dwellings $1,122,430 0.1% 11.4%
Capital city houses $1,395,218 0.9% 12.8%
Capital city units $828,525 0.6% 7.7%
Regional dwellings $708,181 0.8% 2.9%

Source: CoreLogic

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.

According to CoreLogic, Sydney dwelling prices rose 24.2% 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 have risen 11.9% since… so a new price peak is close.

Of course, there is no "one" Sydney housing market and 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.

Some areas are strongly outperforming others.

Sydney

Sydney’s listings and clearance rates are low

Currently property buyers are 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.

However, Sydney property sellers still continue to hesitate - the trend of holding off from going to market amid uncertainty has continued into the new year, which has caused the number of new listings to remain low.

Total property listings for Sydney are 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 Sydney 26 February

Source: SQM Research

Sydney’s auction clearance rates are a good indicator of the depth of buyer and seller sentiment and 2024, has started the year strongly.

Fig02

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

While the Sydney market has cooled from its peak across the city, some of Sydney’s most sought-after areas continue to fetch impressive prices.

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 Sydney 26 February

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 Sydney

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 performing Sydney's suburbs

2023 was a year when our property markets began the new phase of the property cycle - the recovery phase.

Even despite higher interest rates, sky-high inflation, and tightened lending, property markets across the country rebounded from their January 2023 trough.

However, as always, there is not one “Sydney property market” and some segments outperformed others.

Here are some of the best performers for New South Wales in 2023, according to CoreLogic’s Best of the Best report:

Sydney’s top performers (Houses)

Category Region Suburb Numbers
Most expensive suburb: SYDNEY - EASTERN SUBURBS BELLEVUE HILL $9,731,177
Most affordable suburb: CENTRAL WEST PEAK HILL $192,813
Strongest 12 month growth in values: CAPITAL REGION TRALEE 34.20%
Strongest 12 month decline in values: RICHMOND - TWEED MULLUMBIMBY -15.00%
Strongest 12 month growth in rents: SYDNEY - EASTERN SUBURBS KENSINGTON 24.90%
Highest gross rental yields: NEW ENGLAND AND NORTH WEST BOGGABRI 8.50%

Source: CoreLogic

Sydney’s top performers (Units)

Category Region Suburb Numbers
Most expensive suburb: SYDNEY - EASTERN SUBURBS POINT PIPER $3,316,847
Most affordable suburb: NEW ENGLAND AND NORTH WEST NORTH TAMWORTH $294,987
Strongest 12 month growth in values: SYDNEY - EASTERN SUBURBS MAROUBRA 16.50%
Strongest 12 month decline in values: MUDGEE CENTRAL WEST -11.40%
Strongest 12 month growth in rents: SYDNEY - INNER SOUTH WEST LAKEMBA 28.10%
Highest gross rental yields: SOUTHERN HIGHLANDS AND SHOALHAVEN SUSSEX INLET 7.60%

Source: CoreLogic

And these are the Sydney and regional New South Wales suburbs with the top sales in 2023:

Houses - Greater Sydney (2023)

# Suburb Region Total value (12m) Total value (12m) Median value
1 Mosman Sydney - North Sydney and Hornsby 236 $1,461,633,850 $5,285,694
2 Vaucluse Sydney- Eastern Suburbs 90 $859,644,840 $9,259,923
3 Castle Hill Sydney - Baulkham Hills and Hawkesbury 347 $792,489,874 $2,278,707
4 Paddington Sydney- Eastern Suburbs 211 $723,152,250 $3,359,777
5 St. Ives Sydney - North Sydney and Hornsby 213 $688,899,171 $2,921,875

Source: CoreLogic

Houses - Regional NSW (2023)

# Suburb Region Total value (12m) Total value (12m) Median value
1 Port Macquarie Mid North Coast 602 $562,458,323 $877,087
2 Orange Central west 621 $482,657,499 $664,400
3 Dubbo Far West and Orana 692 $414,403,588 $503,233
4 Bowral Southern Highlands and Shoalhaven 196 $335,636,727 $1,512,129
5 Goulburn Capital Region 459 $306,662,592 $563,346

Source: CoreLogic

Units - Greater Sydney (2023)

# Suburb Region Total value (12m) Total value (12m) Median value
1 Macquarie Park Sydney - Ryde 590 $551,812,608 $849,675
2 Mosman Sydney - North Sydney and Hornsby 310 $543,743,813 $1,384,510
3 Manly Sydney - Northern Beaches 263 $539,950,876 $1,744,301
4 Sydney Sydney - City and Inner South 333 $527,082,128 $1,188,069
5 St Leonards Sydney - North Sydney and Hornsby 329 $476,823,290 $1,211,226

Source: CoreLogic

Units - Regional NSW (2023)

# Suburb Region Total value (12m) Total value (12m) Median value
1 Wollongong Illawarra 426 $354,744,773 $726,212
2 Port Macquarie Mid North Coast 314 $195,902,406 $589,278
3 Tweed Heads Richmond - Tweed 202 $163,375,105 $737,278
4 Byron Bay Richmond - Tweed 79 $162,977,000 $1,355,910
5 Newcastle Newcastle and Lake Macquarie 157 $154,105,366 $959,211

Source: CoreLogic

As you can see, the strongest markets for houses and units in Greater Sydney are spread across several areas - from North Sydney to the Eastern Suburbs, but also Baulkham Hills and Hawksbury and even Ryde and the City and Inner-South.

As with Sydney and Melbourne, there is a strong correlation between the prices of dwellings in markets and recent growth performance.

This means the ‘higher end’ of the Sydney market is generally making larger gains.

Again, the best-performing suburbs in regional NSW are spread across several areas - mid-north coast, central west, far west, Southern Highlands, Illawarra, Richmond-Tweed, Newcastle, and Lake Macquarie.

Sydney

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

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.
17 comments

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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Hi Michael, Thanks for the article. I was hoping you could give my partner and I some advice. I have recently inherited some cash and we would like to buy an investment property. We have been looking for a while and have found a two bedroom apar ...Read full version

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Thanks Michael, Thanks for an indepth analysis and helpful article.

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