As experienced buyers’ agents in Sydney, we are constantly researching and evaluating the property market. With the new year now well under way, we have analysed the various market indicators that shape the current real estate landscape and will share our insights with you below.
Our research delves into some of the main indicators of the Sydney property market, providing a comprehensive look at property listings, auction clearance rates, lending patterns, and market resilience. Based on our analysis, we believe that the first half of 2024 presents a prime opportunity for many property buyers across Sydney. However, we anticipate stronger property price growth and fierce competition amongst buyers in the latter part of 2024.
However, we recognise that economists and specialists, despite relying on data and metrics, are not always able to predict market movements accurately. The property market can unexpectedly change direction. It is always wise for buyers to conduct their own research and assess their situation and purchasing capacity before diving into the market. Our analysis may provide some context to understand buyer and seller activity in the current property market.
More Properties for Sale
Rising Number of Property Listings
The Sydney property market is experiencing a notable increase in the number of properties listed for sale. Data from SQM Research reveals a consistent upward trend in the volume of listings, with January 2024 showcasing circa 25,000 properties for sale in Sydney, compared to circa 23,700 properties listed for sale in January 2023. This gradual rise suggests a slight shift from the seller-dominated market, by offering more choice to prospective buyers.
December 2023’s PropTrack Listings Report from REA indicates a significant 17.4% increase in new property listings compared to the previous year. This surge is bringing the Sydney market closer to its long-term listing averages, signaling a move towards an equilibrium in supply and demand. The increase in listings is particularly noteworthy given the previous years’ persistent supply shortage, which had been a key driver of Sydney’s property price hikes.
Impact on Buyer Sentiment and Behaviour
The increase in property listings is reinvigorating buyer enthusiasm, as it provides more options and opportunities. However, this trend can also have the effect of higher attendance numbers at property inspections. This can create a sense of urgency and competition among buyers. This behaviour can motivate people into action, potentially influencing emotional purchases and emotional prices.
Auction Clearance Rates
A Shift in Auction Dynamics
In Sydney, the auction clearance rates took a downward turn in the latter half of 2023. This was an unusual trend, straying from the usual uptick we often see in spring. SQM Research provide a graph which shows the notable trend against the previous 3 years of data:
Enhanced Buyer Leverage
The combination of lower clearance rates and an influx of new listings provides buyers with greater leverage. This environment enables more effective negotiation strategies, particularly in pre-auction offers and post-auction negotiations, where properties may pass in.
Indicators Point to Price Rises Later this Year
The latest figures from the ABS show that the value of new loans is on the rise. New loan commitments increased by 1% in October 2023, marking a 13.1% jump from the previous year. Loans for owner-occupiers were up by 10.6% from last year, while investor lending surged by 18%. These significant increases highlight the strong demand for property, driven by the availability of credit.
With the lending trend upward and rents hitting record levels, we can expect the property market to remain strong. Furthermore, with rental growth still anticipated in 2024, investment property loans are likely to keep climbing.
Anticipated Interest Rate Movements
Inflation data released this week comes in at 4.1% which is below expectations and significantly down from the rate of 5.4% in the September quarter. This deceleration in inflation is sparking widespread discussion about the future of interest rates.
Many commentators and media outlets are now suggesting that the once-anticipated interest rate hike in February 2024 is unlikely to happen, given the latest data. Many economists and market analysts are predicting interest rates to be cut by the end of the year.
The Housing Supply Crisis
Dwelling Approvals Falling Short
Nationally, dwelling approvals for both houses and units are falling short of their long-term averages. The decade’s monthly average stands at 17,254 approvals, but over the past six months, the figure has dropped to an average of just 13,760 per month.
In New South Wales, the situation is similarly challenging. For the month of November, total dwelling approvals saw a decline of 6.9%.
To address the growing housing demand, the NSW government is tasked with constructing 75,000 new homes each year for the next five years, as part of the National Housing Accord. Yet, in the 12 months leading up to September, construction began on only 58,433 homes in NSW, according to ABS data.
This gap in new housing supply, combined with an uptick in net overseas migration, is expected to continue exerting pressure on the Sydney housing market.
Assessing Sydney’s Market Resilience
Short and Medium-Term Price Trends
In 2021, property prices saw a significant increase of 25.3%. Following this, in 2022, Sydney’s property market experienced a downturn, with prices decreasing by 12.1%. However, the market rebounded in 2023, with property prices climbing by 11.1% throughout the year, nearly returning to the peak growth rates observed in January 2022.
The Long-Term Perspective
Over the last decade, Sydney’s housing market has demonstrated robust growth, with house prices doubling. This long-term trend is a testament to the market’s strength and resilience, underscoring the potential for continued growth.
As we enter 2024, the Sydney property market presents a clear opportunity for buyers in the first half of the year, with increased listings and favourable conditions creating a buyer-friendly environment. However, the latter half of the year is expected to become more competitive, with price growth potentially challenging buyers’ budgets.
For those looking to purchase, the early months of 2024 are the time to act, in order to take advantage of the current market dynamics before the competition heats up later in the year. Call Nick Viner on 0405 134 645 today.