Sydney’s property market continues to remain resilient amidst high interest rates and economic uncertainties says Thomas McGylnn BresicWhitney CEO.
Sydney’s property market continues to remain resilient amidst high interest rates and economic uncertainties. This trend, evident throughout the last financial year and the first half of 2024, is the defining theme of BresicWhitney’s latest edition of The Quarterly.
Sydney’s key lifestyle markets, or those within an approximate 10-kilometre radius of the CBD, continue to remain the most sought-after for buyers seeking connection, community, and the quintessential lifestyle that our Harbour City offers.
BresicWhitney has witnessed persistent demand for quality properties throughout the year, and this has driven not only steady but competitive sale prices, achieved from the Inner East and Inner West, through to Hunters Hill and the Lower North Shore. BresicWhitney’s average sale price remains above $2 million.
Despite weak consumer sentiment levels, higher-than-expected inflation figures, and the potential threat of a rate hike in August, BresicWhitney remains steadfast in its assessment of the resilience of Sydney’s property market.
It is largely insulated from broader economic fluctuations for many reasons—not least because property ownership has become intrinsically linked with modern lifestyle choices and long-term financial planning across many demographics.
BresicWhitney has observed many sellers in Sydney articulating one resonant truth: selling a home in Sydney now, without purchasing another property prior, has the potential to represent an opportunity to re-enter the market.
Over the year, BresicWhitney transacted close to $2.5 billion of Sydney property. Between January – May the group surpassed $1 billion in residential sales; achieving this milestone earlier than anticipated.
This demonstrated the transactional flow from the outset of the New Year and its continuation, despite the much-talked-about macroeconomic challenges. On a monthly basis, transaction volumes have followed typical seasonal norms, translating to a slight slowdown in June to mark the start of Winter.
Despite this, BresicWhitney sold 309 properties in the second quarter, a 27% increase on the first quarter of the year. Q2 also welcomed an increasing proportion of sales occurring off-market, or selling prior to auction, reflecting the broad-based appetite to buy Sydney property among current buyer groups.
Sellers who chose to auction their homes benefited from this strategy, as BresicWhitney’s average auction clearance rate remained high at 80%. This contrasts with the average metropolitan Sydney auction clearance rate of 66.9% collected by CoreLogic for the three months to the end of June.
Meanwhile, the rental market also exhibited significant changes over the second quarter, with a clear easing of conditions for tenants. This included more homes coming on the market.
While BresicWhitney leased over 300 properties and maintained an average of 20 days on market, this marked a downturn from both Q1 and year-on-year conditions. The group’s overall vacancy rate recorded a slight uptick to 1.9%.
Rents also stabilised across wider metropolitan Sydney, with data from Domain evidencing the holding of an average of $750 per week. This marked stability in rents for the first time in over 18 months. BresicWhitney’s average rental price however continued to grow marginally, up to $909 on $881 the quarter prior.
BresicWhitney has witnessed an increase in investors willing to meet the market, offering more competitive rental prices and flexible lease terms when required.
Looking ahead, it’s likely Sydney will experience an early start to the ‘Spring selling season’. BresicWhitney data reveals listing volumes increasing and an uptick in owners intending to sell over this period; reflected by a higher-than-average number of agency agreements signed across BresicWhitney, with these properties due to come online towards the end of Winter.
BresicWhitney is anticipating momentum to remain within the Sydney property market over the next three to six months, with the group likely to transact on approximately $2.5 billion of Sydney real estate for the full 2024 calendar year.
From family homes to heritage terraces, townhouses, apartments, and warehouses, the Inner West is one of Sydney’s most diverse housing markets, attracting first-home buyers, upsizers, downsizers, investors, and tenants.
While this remained a constant across the 2024 Financial Year, a subtle shift in market dynamics unfolded in the three months to July 2024. BresicWhitney observed a paring back of bidder participation and local auction activity. This was exemplified during auction activity on the last weekend of June, in which of 23 scheduled auctions, 15 of those sold prior.
Across the group, BresicWhitney’s data indicates 21% of transactions in the quarter occurred off-market, the highest proportion in more than a year, as the trend has gradually gathered pace throughout the rate hiking cycle.
BresicWhitney attributes this late-quarter slowdown and reduction in registrations at auction to cautious buyer behaviour due to the anticipation of another potential interest rate rise.
It is now clear that the response to comments by the Reserve Bank of Australia (RBA) and macroeconomic data is causing buyer hesitation and reducing competition for individual properties.
BresicWhitney also perceives this as a reminder of the ability of the Sydney property market to pivot quickly and the nuances in each market. Activity in some of the more family-orientated suburbs is more likely to respond to seasonality and events such as school holidays.
The outlook for Sydney’s property market, especially in its tightly held village hubs within the 10-kilometre radius of the city, remains optimistic despite ongoing economic uncertainties. Sydney house prices have surged to record highs, driven by a persistent undersupply of housing that continues to push prices upward, promising future growth.
Concerns over high inflation persist, with potential implications for interest rate hikes or sustained elevated rates that could temper competition.
Nonetheless, financially strong buyers without significant borrowings are expected to remain active, seizing opportunities across all market segments. Off-market transactions conducted swiftly and confidentially will remain a key feature of Sydney's property landscape.
As we navigate through the remainder of Winter, the market is poised to transition into a robust and balanced phase by Q3, accommodating sellers, buyers, tenants, and investors alike.
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