Sydney Property Market Update
Sydney has emerged as a city for high-end, knowledge-based business and financial services jobs in 2023, earning it the title of the economic hub of the Asia-Pacific region. This increase in job creation and confidence has also led to population growth, which has further boosted the real estate market.
Sydney property prices are projected to fall 6% in 2023 after they fell 14% in 2022. However, this is after housing values in Sydney had soared a massive 27.7% between October 2020 and January 2022.
Looking at the Sydney property market more recently, the median home price in 2023 is $1,257,000 and median unit price was $783,500 at the start of 2023.
Sydney’s housing market has so far contrasted previous expectations and outperformed most markets despite a relatively slow economic recovery and being overly exposed to recent migration losses. With housing affordability now worsening and first home buyers showing signs of being priced out of the market, the bulk of these gains have likely now been realised.
Prices have since reduced from peaks seen in previous years, however Sydney’s property market continues to fetch high prices, especially in some of its most sought-after areas.
When it comes to locations with the greatest demand potential, more and more buyers are looking at obtaining properties in Sydney’s larger regional locations, particularly in lifestyle locations such as Byron Bay, the Central Coast, the Hunter Valley, and the NSW South Coast such as Wollongong. Beachside suburbs should also continue to perform strongly as they are likely to outperform the broader market as a whole.
There is also a definite flight to quality, as Class A owners and investment grade properties are still in short supply to general strong demand, while Class B properties take longer to sell and Informed buyers avoid C-class properties.
Sydney Property Market Overview 2023
Sydney’s average unit price fell another -1.2% in January, just below $770,000. On a quarterly basis, the -3.2% decline in housing represents a softer landing, compared to a -15% loss in housing, with annual growth just below -10%. However, how far prices fall depends largely on how far interest rates rise.
Units are also expected to continue to attract investors as immigration increases significantly, bringing additional demand to the rental market. This increased demand in alignment with renewed investor activity and more interest from first home buyers priced out of the house market could help mitigate those price falls.
The RBA has now set the cash rate at his 3.35%, well above the 0.1% emergency interest rate that borrowers were enjoying until last May. The bank predicts this rate could hit 3.60-3.85% in 2023, with rate cuts possible later in the year. Family housing in prime Sydney suburban locations is expected to thrive amid growing demand from owners and investors, but apartments in high rise towers will continue to decline.
Sydney’s apartment market has outperformed housing, and the record price gap is now narrowing as house prices have fallen from their respective price peaks more than twice as fast as they rose.
Despite falling vacancy rates, Sydney remains an attractive destination for both locals and newcomers.
Australian Residential Property Planners Sydney, 65 York Street Sydney CBD 2000 NSW
Australian Residential Property Planners Parramatta, 91 Phillip Street 2150 NSW
Our Services are Free to Investors
Contact Australian Residential Property Planners for our investors free information pack, Properties available, or to arrange an obligation free consultation.