It’s no secret that over the last 12 months, the Sydney property market has experienced some major adjustments. The combination of climbing interest rates, higher inflation, Ukraine war, and general consumer sentiment has culminated in a major slow down and decline in property prices.
This decline,which was not predicted to occur until the second half of 2023, has in fact been fast tracked thanks to the sooner than expected hike in interest rates.
Although the band aid has now been ripped off, it actually means we are further ahead in the cycle than previously predicted. This combined with a number of other factors is why we believe selling your home in 2023 might be a good idea. We share 3 of these insights below:
1. Stamp Duty Reforms
The overhaul of NSW stamp duty is an exciting step forward which will positively impact a large portion of Sydney’s first home buyers. Under the First Home Buyer’s Choice scheme, people purchasing their first home will now be able to choose between paying an annual land tax or an upfront stamp duty.
This is a long awaited reform that will finally provide first home buyers with a choice, helping thousands of people shave around two years off the time needed to save for a deposit. The legislation covers all new or existing homes valued up to $1.5 million.
Due to officially take effect from 16 January 2023, eligible first home buyers who exchange sales contracts after this date will have the option to pay no stamp duty for their purchase, and instead opt in to the annual property tax.
Thanks to this initiative, we will see an increase in demand from first home buyers for properties valued up to $1.5 million. Increased demand = increased competition which results in higher prices. So if your property is worth say $1.3 million, increased competition could potentially lift it’s value to $1.35 million.
We welcome this reform with open arms as it is a WIN/WIN for everyone!
2. Flow on effect to higher valued homes
The most common method of establishing what your home is worth is by using the comparable sales method. This is where you compare other properties with similar characteristic in your neighbourhood to your own. Those homes sold within the preceding 3 months are the best examples to use for this method and will provide you with the most accurate estimate of what you might achieve for your own home.
It’s safe to say that if other properties that are similar in number of bedrooms, bathrooms, land size etc are selling at higher level thanks to the increased competition among first home buyers, this will in turn cause a ripple or flow on effect to the values of other homes in the area including yours. As the old saying goes – ‘a rising tide lifts all boats’ – the same can be said for property prices.
We could therefore begin to see an uplift effect on property values between $1.5 million to $2 million within the first half of next year with a continued flow on effect for higher valued homes toward the middle and end of 2023.
3. Limited supply and slowdown in interest rates
With all the uncertainty and doom and gloom touted by the media, many homeowners chose to hold off selling their home this year which resulted in a lack of supply. It has been this supply shortage that has kept the property market afloat. The actual statistics for declining prices has not been as devastating as predicted. It’s true that certain parts of Sydney have felt the downturn the most, however these are typically those areas that experienced the biggest gains during the pandemic-led boom. Sydney is made up of many micro markets – all which move to the beat of their own drum. What happens in one micro market may be the opposite to what is happening in another.
At this stage it is difficult to say whether 2023 will see an increase in the supply of properties for sale across the board. Many agents we speak to already have home sellers lined up to sell their home in the new year. With the worst of the interest rate rises behind us, 2023 could see Sydney begin it’s recovery phase of the cycle.
If you’re thinking of selling in 2023 and ready to start planning, we’re here and ready to assist you.
Before you call in the local agents, get in touch to find out how selling with us is more lucrative, stress free and a safer way to ensure your interests are protected and you don’t get taken advantage of.