The Sydney property market has long been facing a significant challenge: low stock levels. This issue has been a growing concern for property buyers across the city, leading to increased competition and rising prices. In this article, we will review the factors contributing to the low stock levels, analyse recent statistics, compare trends over the past decade, and provide predictions for the coming months.
Current Situation: Low Stock Levels
Sydney real estate buyers are increasingly vocal about the scarcity of available properties. The limited stock has created a highly competitive environment, making it difficult for buyers to find suitable homes. This shortage is not just a perception, it is backed by data. According to recent reports, the number of new listings in Sydney has not kept pace with the demand. This imbalance is driving up prices and making it more and more challenging for buyers to secure properties.
Recent Data on the Supply of Existing and New Homes
The Core Logic Monthly Housing Chart Pack for July 2024 reveals that new listings have actually increased by 0.5% over the 4 weeks to 7 July 2024 compared to the same period last year and this figure rises to 2.1% for total listings. However, increasing buyer demand is clearly absorbing this modest uplift in listings as dwelling values increased by 1.1% over the June quarter and by 6.3% over the past year.
The long term outlook for new housing supply is that there is an increasing shortfall in the supply of new homes to meet increasing demand. In the Federal Government’s National Housing Supply and Affordability Council Report of 3 May, 2024, it was stated,
“Australia is experiencing a period of elevated demand for housing, and supply is not keeping up. We estimate that 244,000 households were formed in the 2022–23 financial year with another 208,000 to form in the 2023–24 financial year, before returning to more normal levels. This rate of household formation is well above the 173,000 dwellings delivered in 2022–23 and the expected 178,000 new dwellings in 2023–24. As well as population growth, the size of households and consumer preferences for housing types are also important and do have an impact on demand…
Over the 6‑year period, from July 2023 to June 2029, we estimate there will be a shortfall of new market supply relative to new demand of 40,000 homes.”
Long-Term Trends: A Decade of Change
Over the past decade, Sydney’s property market has experienced significant fluctuations. The 2021 property boom saw median values increase by over 25% in just 12 months. However, this was followed by a sharp correction in 2022, driven by rising interest rates and affordability concerns. Despite these challenges, the market rebounded in 2023, with home values returning to near-peak levels.
Looking at a broader timeline, Sydney’s property prices have surged well beyond other capital cities, particularly over the past four years. This long-term trend highlights the persistent demand and limited supply that have characterised the market.
Factors Contributing to Low Stock Levels
Several factors are contributing to the current low stock levels in Sydney right now:
- End of Financial Year: The end of the financial year often sees a slowdown in property listings as sellers wait for the new tax year to list their properties.
- School Holidays: During school holidays, many families are away, leading to fewer listings and reduced market activity.
- Winter Season: The winter months traditionally see a drop in property listings as sellers prefer to wait for the spring selling season.
- Population Growth: Sydney’s population growth has outpaced the construction of new dwellings, exacerbating the supply-demand imbalance.
- Planning Restrictions: Geographical constraints and planning restrictions have limited the expansion of land suitable for housing.
Predictions for the Coming Months
Looking ahead, the outlook for Sydney’s property market remains mixed. While some experts predict continued price growth, the pace is expected to slow. ANZ forecasts a 6-7% increase in capital city housing prices in 2024, with similar growth expected in 2025 and 2026. However, the market is likely to remain fragmented, with well-located A-grade homes and family-friendly apartments continuing to attract strong demand, while B-grade properties may take longer to sell.
The expectation of falling interest rates in the second half of 2024 could boost borrowing capacity, further supporting buyer demand. However, the persistent issue of low stock levels will continue to exert upward pressure on prices.
The Role of Buyers’ Agents
In a market characterised by low stock levels and high competition, the services of buyers’ agents become invaluable. Buyers’ agents have access to off-market properties and can provide insights into upcoming listings, giving their clients access to more properties and a competitive edge. Buyers’ agents also provide expert negotiation skills helping buyers secure properties at the best possible prices.
Using a buyers’ agent can be particularly beneficial in the current market. With their extensive networks and market knowledge, buyers’ agents can identify opportunities that may not be available to the public. This access to a broader range of properties can be crucial in a market where stock levels are low and competition is fierce.
Conclusion
The Sydney property market is currently facing a significant long term challenge with low stock levels overall. This shortage is driving up prices and making it difficult for buyers to find suitable properties. Recent statistics and long-term trends highlight the persistent demand and limited supply that have characterised the market. Several factors, including the end of the financial year, school holidays, and winter season, contribute to the current low stock levels. Looking ahead, the market is expected to see continued price growth, albeit at a slower pace.
The services of buyers’ agents can provide a competitive edge in this challenging environment, offering access to off-market properties and expert negotiation skills.
For those navigating the Sydney property market, understanding these dynamics and leveraging the expertise of buyers’ agents can make a significant difference in securing the right property at the lowest possible price. For more information and expert assistance in finding your ideal property in Sydney, contact Buyer’s Domain.
