Sydney house prices rise further again as we move into 2024, although prices are yet to recover from their pandemic peak.

Sydney Housing Market Update | February 2024

You can also check out the local reports for Brisbane and Melbourne.

Sydney’s housing values also boomed through 2020 and 2021 with prices rising by 27.2% before falling 12.4% from their peak in January 2022 to the recent trough in January 2023.

The Sydney housing market has also clearly turned the corner with prices rising consistently – now up 11.6% since January 2023.

Over the last few months, the sentiment of both Sydney property buyers and sellers has changed and buyers are pushing up the price of well-located A-grade homes and “family-friendly” apartments which are still in short supply, but B-grade properties are taking longer to sell and informed buyers are avoiding C-grade properties.

This flight to quality means that moving forward the various sectors of the Sydney real estate market will be segmented, which is a more “normal” property market.

Sydney’s strong auction clearance trends are also a great “in time” indicator of market sentiment and a leading indicator of future property prices.

Here is the latest data on the median property prices for Sydney.

Property Median price MOM QOQ Annual
Capital city dwellings $1,122,430 0.2% 0.1% 11.4%
Capital city houses $1,395,218 0.30% 0.9% 12.8%
Capital city units $828,525 0.0% 0.6% 7.7%
Regional dwellings $708,181 0.4% 0.8% 2.9%

Source: CoreLogic, 1st February 2024

Here’s what’s currently happening in Sydney

Price growth in early 2024 is supported by an overall supply constraint and cautious buyers.

Total property listings for Sydney are marginally higher than in the same month last year, although the stock of older listings is slimmer so overall supply remains constrained.

Seller and buyer sentiment also continues to weigh on Sydney’s clearance rates, which were on par with the national clearance rate in late December – only 55% of the 650 scheduled auctions over the third weekend in December were sold, according to Domain’s auction results.

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.

Michael Yardney
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.
Back
archive__image