What’s REALLY Happening to Sydney Property Values

The pace of growth in Sydney’s housing values, which has led the upward trend since the start of the year, has now started to slow down. The monthly growth rate has decreased from a recent high of 1.8% in May to 0.9% in July. Additionally, the number of new listings in the Sydney housing market has risen significantly.

Compared to the same period last year, there is a 9.9% increase in fresh listings, and it is 18.0% higher than the average of the past five years. This influx of new listings is providing more choices for potential buyers and reducing the sense of urgency in the market. Buyers are now able to take their time to decide which property they prefer to pursue and in some cases are holding back on trying to purchase prior to auction.  

The deceleration in the growth of housing values can be attributed mainly to a reduction in gains within the upper quartile of the market. While the upper quartile’s growth rate in the combined capitals index declined from 1.8% in May to 0.7% in July, the lower quartile (1.0%) and the broader middle segment (0.9%) exhibited resilience during July. These segments have consistently shown growth over the past few months, in line with housing finance data indicating increased lending to first home buyers and investors.

These segments tend to be more active within the mid-to-lower price range, where competition for home purchases can become more intense. Premium housing markets often lead market cycles, so this slowdown may signal a broader easing in growth in the upcoming months.

In regard to new listings, most capital cities have experienced an uptick in July, with Sydney being the only city where the flow of new listings has exceeded the previous year. This unusual trend could be due to several factors, including homeowners taking advantage of an unusually strong winter market, as opposed to waiting for spring when competition is predicted to increase.

As fresh listings increase, supply might become more balanced unless housing demand picks up concurrently. The uptick in demand is supported by higher sales activity and increased home loan commitments, suggesting a potential upward trend in housing activity.

Despite an expected stabilization of interest rates, borrowers are still facing some challenges. In the coming months, more borrowers are likely to experience the impact of rate hikes as variable rates follow the cash rate with a time lag. the transition of over 800,000 home loans from low fixed rates to higher variable rates around 6% is ongoing. While mortgage arrears are expected to rise from their current near-record lows, significant defaults might hopefully be avoided due to forecasts of labour market improvements.

Forecasters predict that housing demand driven by population growth is anticipated to persist over the next few years, potentially leading to an undersupply of around 175,000 dwellings by 2027. This shortage is likely to continue to support housing prices in the long run.

A quick word of advice….. timing the market is difficult – even for the experts. If you wait for the market to improve, the value of the property you are looking to buy will also increase. The right time will depend upon your own individual circumstances.

If you have been thinking about selling your home but unsure of the right timing, Book A Call with our Vendor Advocates to discuss your options and help you make the right choice. We provide advice on best ways to achieve the highest sales price as well as what to look for when choosing a real estate agent. Visit our website to find out more.  

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