With headlines about the cost-of-living crisis still swirling through news cycles at least property owners – as well as property buyers of course - can take solace in market forecasts for the year ahead: the consensus among banking and property analysts is for residential values to remain not only strong but continue to rise.
It's a more than positive sign coming after the unforeseen increases in 2023. Over the year, Sydney home values defied predictions jumping by 11.1% CoreLogic data shows, median home prices hitting a record high of $1.12 million while some areas saw increases as much as $1.5 million. Residents in over 90% of Sydney suburbs enjoyed significant rises in median values with 40 suburbs entering the $1 million-median-plus club and about 25 suburbs going over $2 million. A dozen Sydney suburbs entered the $3 million bracket and four surpassed $4 million.
Positivity plus
This time around the big four banks forecast national growth of between 3% and 5% - less than last year but close to the 30-year average – with Sydney homes to achieve average rises in value of 5%. Among those adding even more shine to this scenario are ANZ senior economist Adelaide Timbrell who predicts Sydney home prices to lift 6% to 7% on average in 2024. Others like Shane Oliver, AMP’s chief economist, are equally positive albeit a tad more conservative, saying: "Property price gains will continue into next year albeit at a slowing pace as high interest rates continue and unemployment rises, which will constrain demand and potentially boost supply." Similarly, 10/10 economists interviewed by the Australian Financial Review predicted price gains of 4.8% on average by the time next December comes around. Real Estate Institute of NSW president Tim McKibbin is another backing Sydney’s winning streak largely thanks to the “desperate shortage” of property in NSW and Sydney both. “This means that even if there’s another [interest rate] rise or rises in 2024, values are likely to hold up,” Mr McKibbin says.
Market drivers
In essence it appears that stability is starting to return says Rose Buyers Agents CEO Simon Rose. “Listings are still on the lower side which again, like the forecasts, is good news for buyers’ agents whose services really come into their own when properties are hard for the seekers to find,” Mr Rose says.
“Right now we’re observing short supply of prime properties in good locations – solid investments and homes in coveted school catchment areas, or close to urban centres and lifestyle attractions such as beaches and the harbour. We are also finding There’s also more demand for family-friendly apartments than stock. we’re finding.
“But the reality is that the Sydney market is consistently strong. People still want to spend their cash here. And unless something truly upsets the economy there is no reason why the housing market will not continue its current positive trajectory.”
Another factor that may reign in prices to just shy of the 5% and 6% predictions is if greater numbers of borrowers are forced to sell their homes as they slide off their less expensive fixed-rate mortgages into the realm of higher – and less manageable – repayments, Mr Rose says. “Still the most current data puts dwelling approvals per 100,000 people near historic lows,” Mr Rose says. “So as unfortunate as this is, it is simply another factor that will keep driving up values and especially in such as desirable city as Sydney.”