With just over a month to go until December, the decision of whether to purchase property now or wait until 2025 is a pressing question for many potential homebuyers in Sydney. As a buyers’ agent based in Sydney’s Inner West, we understand the significance of this choice. While predicting the future with certainty is impossible, current market conditions and expert forecasts combined with interest rate predictions suggest that buying now might be a more advantageous option. Here, we explore the reasons why purchasing property in Sydney today could be beneficial.
Current Market Dynamics
Sydney’s real estate market is currently characterised by a combination of high demand and constrained supply. The city’s housing deficit is projected to rise significantly, with an estimated shortfall of 190,000 homes unless new approvals are accelerated. This shortage is exacerbated by declining dwelling approvals, which have reached their lowest levels in over a decade. Such conditions create a “perfect storm” that are highly likely to lead to further increases in property prices and rental costs.
Demand Outstripping Supply
The persistent demand for housing in Sydney is driven by several factors:
- High Immigration Rates: Australia continues to experience significant net migration, contributing to population growth and increased housing demand.
- Limited New Construction: The decline in dwelling approvals and construction delays due to labour shortages and high building costs have limited the availability of new homes.
- Strong Rental Market: With vacancy rates remaining low, rental prices are expected to continue rising, pushing more people towards purchasing homes as an alternative.
Economic Forecasts
Several economic indicators suggest that buying now could be financially prudent:
- Interest Rate Predictions: Industry experts anticipate that the Reserve Bank of Australia (RBA) will begin cutting interest rates towards the end of 2024 or early 2025. While this might suggest waiting could be beneficial, the current high demand and low supply mean that prices are likely to continue rising regardless of rate cuts.
- Price Growth Projections: House prices in Sydney are expected to rise steadily over the next 18 months. KPMG forecasts a national increase of 5.3% over the next six months and 5.6% during 2025. Similarly, other reports predict continued price growth throughout 2025.
The Case for Buying Now
Given these dynamics, there are compelling reasons to consider purchasing property sooner rather than later:
- Avoiding Further Price Increases: With house prices projected to rise, buying now could mean securing a property at a lower price than what might be available in 2025.
- Capitalising on Current Interest Rates: Although interest rates are currently high, they are expected to decrease gradually. Buyers who secure financing now may benefit from refinancing at lower rates in the future.
- Investment Opportunities: The strong rental market offers attractive yields for investors, particularly in unit markets where demand remains robust.
Uncertainties and Considerations
While there are strong arguments for buying now, it is important to acknowledge the uncertainties:
- Economic Volatility: Global economic conditions and domestic factors such as inflation and wage growth could influence future market trends.
- Government Policies: Changes in immigration policies or housing regulations could impact supply and demand dynamics.
Conclusion
In conclusion, while we cannot predict the future with absolute certainty, current market conditions favour purchasing property now rather than waiting until 2025. The combination of high demand, limited supply, and projected price increases suggests that acting sooner may provide financial advantages.
Whilst stock is generally low, we have noticed that some properties have been selling below vendors’ initial expectations. Furthermore, in previous years, we have successfully negotiated some of our best deals in the month of December as some buyers switch off for year’s end whilst the motivation of some vendors to sell increases. So if you are serious about buying a property, it makes sense to be searching now.
As always, potential buyers should consider their personal circumstances and consult with professional buyers’ agents to make informed decisions tailored to their needs.
