Sydney home values posted a nominal recovery in May following a 14.1% rise in value since the market bottomed out in January last year.

Sydney Housing Market Update | June 2024

The sharp rise in home values came after a 12.4% decline in values between January 2022 and January 2023.

Sydney house prices graph

Sydney House Prices Graph May 2024

Sydney dwelling values have been rising for 17 straight months.

However, the pace of growth is now much lower than it was at the same time last year when values were up 2.1% over the month.

The monthly rate of change has held below the 1% mark since August last year.

With a median house value of $1.44 million and a median unit value of almost $849,000, Sydney remains by far the highest-value capital city.

Sydney Housing Market Update June 2024

Sydney house prices – what happened in 2023

The pace of value gains across Sydney 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.

But while Sydney’s property prices dropped from their peak early on in 2023, the market stabilised and even partly recovered by the end of the year, pointing towards an outlook with a more sustainable rate of growth in home values leading into the new year.

Figure 2

Source: SQM Research

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 throughout 2023.

Sydney house prices – the longer-term data

CoreLogic’s data shows how Sydney house prices have rapidly risen and dropped since 2019.

The Sydney property market upswing in 2021 was one of the strongest property price growth periods in Australia’s history.

And it was followed by an equally historic drop in prices in the 12 months that followed.

Over the past 30 years, Sydney dwelling values have increased by 449% (5.8% per annum), with the 10 years ending July 2022 recording the highest rate of growth over the past three decades.

The 30-year growth rate was the second highest of any capital city, after Melbourne (459%).

In dollar terms, Sydney’s median house value has increased from approximately $221,770 in July 1992 to $1,346,190 in July 2022; an increase of approximately $1,124,420.

Unit values are approximately $623,080 higher over the past 30 years, rising from $183,230 in 1992 to $806,310.

Figure 3

Sydney’s housing market – the experts’ forecasts for 2024

There is broad consensus amongst economic forecasters that Sydney’s property markets will continue to fall before recovering once the Reserve Bank’s interest rate hikes have stabilised.

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

Sydney’s property market ended the year 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.

Some expect a continuation of subdued growth for 2024 while others warn that the risk of a double-dip downturn remains.

After all, buyer affordability is already stretched and the Reserve Bank is tipped to continue hiking interest rates at the beginning of the year in order to get on top of inflation figures.

Many of these forecasts are dependent on the Reserve Bank finishing up its cycle of interest rate increases in order to get on top of inflation, which, according to some forecasts, could be as early as mid-2024.

Some (such as Commonwealth Bank) even forecast that the Reserve Bank could begin to cut rates by September this year.

This forecast is based on the bank’s assessment that inflation will decrease more quickly than anticipated, thus giving the RBA the leeway to lower interest rates to stimulate the economy.

However, the RBA doesn’t really know what it’s going to do – it decides each month and may continue to implement its current policy until it believes that the economy is stable enough to warrant a change.

Of course, it is possible that unforeseen events, such as changes in global economic conditions or domestic politics, may impact interest rate decisions in ways that are difficult to predict.

And therefore any real prediction about the direction of Sydney’s property market in 2024 is up to guesswork.

What we do know though, as I mentioned above, is that the flight to quality will continue so investment-grade properties in A-grade locations will remain in strong demand and are likely to outperform regardless of the market, many holding their values well.

You can read our Brisbane housing market update here and the Melbourne housing market update here.

About Michael Yardney
Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been voted Australia's leading property investment adviser and his opinions are regularly featured in the media.