As a property buyer’s agent in Sydney, we keep a constant watch on the market and the factors influencing property prices. In this article, we share our research into the key property trends we believe will influence the property market in 2024.
Understanding these trends is key to making informed decisions in Sydney’s dynamic real estate market. As we look towards 2024, several factors, including interest rates, housing supply, and population growth, are set to play pivotal roles in shaping the market. Let’s dive into what we can expect in the upcoming year.
Interest Rates and Sydney Property
Interest Rates likely to Remain Steady Most of the Year
The consensus is that interest rates will likely remain stable for the majority of 2024. However, potential rate reductions are anticipated between August and December 2024. According to Canstar, Commonwealth Bank is projecting a rate cut in September 2024, with the expectation that rates will drop to 3.6% by year’s end. Similarly, Westpac is forecasting a rate cut in September 2024. NAB predicts that interest rates will start decreasing from November 2024 onwards. Furthermore, ANZ is also forecasting a rate cut, which they expect to occur in late 2024.
Possibility of Further Rate Hikes
Despite the general trend towards stability and potential cuts, there remains a possibility of further rate hikes, depending on the economic data and inflation figures. The RBA’s decisions will be guided by a range of economic indicators.
Long-term Outlook
Moving into 2025, the predictions lean towards a gradual decrease in interest rates, influenced by easing inflationary pressures and economic factors. This could create a more favourable environment for the Sydney property market.
Sydney’s Housing Supply Challenge
Continuing Shortage
The NSW Government’s revised projection of building 119,400 to 138,550 new homes in Greater Sydney over the next 5 years is a decrease from the previous projection of 151,000 new homes to be built. Additionally, the NSW Government’s new projection for housing falls short of the Federal Government’s ambitious target which would require NSW to build 75,000 homes each year. This ambitious target is further underscored by the fact that in 2022 NSW completed only 48,000 new buildings, lagging behind other states despite a larger population.
Decrease in New Developments
Notably, the amount of new housing, especially apartments, in Sydney has significantly declined. Completed apartments nearly halved since their peak levels in 2017–2018. This trend is likely to contribute to a tighter market and potentially higher property prices.
Government Initiatives
Efforts to boost housing supply include rezoning around Sydney’s transport hubs and accelerating the home-building process, with a focus on affordable housing.
Despite the initiatives taken, Sydney is still grappling with a significant shortage in its housing supply. The disparity between what is available and what is needed is evident and will continue to push up property prices.
Sydney’s Population Growth and Its Impact on Property
Surpassing pre-pandemic population growth
The comparison of this year’s population growth to pre-pandemic levels is quite striking. Back in June 2019, the population increase was only 1.49%. Fast forward to June 30, 2023, and there’s been a significant upsurge in arrivals—310,400 people, which is a 72.7% increase from the previous year. In New South Wales (NSW), the population expanded by 172,600, marking a 2.1% rise compared to the year before. Among all Australian states, NSW recorded the highest number of net overseas migrations.
Future Forecasts
Projections indicate that NSW’s population will grow by over 85,000 people annually until 2041, with Greater Sydney’s population expected to reach approximately 6.1 million by 2041. This influx, primarily fuelled by overseas migration, could lead to increased demand in Sydney’s property market.
Impact of Housing Supply and Migration on Property Prices
The data points to a concerning trend in NSW. With a relatively lower housing supply and an increased rate of net overseas migration, we’re likely to see a rise in both rental and property prices over time driven by increasing demand. As more people move into NSW and Sydney and without a proportionate increase in the number of available homes, competition for existing housing intensifies.
Influence of Market Dynamics on Sydney’s Property Market
Looking ahead to 2024, Sydney’s property market is set to be influenced by various factors, from interest rate movements to housing supply challenges and population growth. These elements will shape the market, creating both opportunities and challenges for buyers and investors. Understanding these dynamics is crucial for anyone looking to navigate the Sydney property market effectively.
Guidance for Property Buyers in Sydney
As property buyer’s agents, our role is to steer clients through these changing market conditions. We provide buyers with the insights and guidance they need to make the most strategic choices in Sydney’s property market.
For more information on Sydney’s property market, and to help you through your property search, contact Nick Viner on 0405 134 645.
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Please note our office will be closed from Friday 22 December, 2023 to Monday 8 January, 2024.
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