What is the state of the housing market in Sydney right now?
The housing market in Sydney has been fluctuating dramatically over the last few years, and some evidence points to this continuing throughout 2023 and beyond.
Massive property price growth in 2021 has caused the property boom to collapse somewhat over the past 12 months. The volatility of the Australian housing market makes it difficult for commentators to accurately make predictions for the coming years. This is posing problems for first-time buyers, renters and those wanting to climb up the property ladder.
Read on to discover the recent history of Sydney’s housing market and learn how inflation rates have affected its performance. After that, we’ll delve into 2023 evidence and make predictions for the future.
2021 was a big year for the Australian housing market in general and the Sydney housing market in particular. In the first quarter of 2021, there was an 8.5% price rise in the cost of housing, which marked the biggest jump in 30 years. Many first-time buyers had never seen such growth in their lifetimes. In 2021, the median cost of a house in Sydney was $1.31m – completely out of reach for many Australians.
These price increases not only affected those hoping to climb the housing ladder but also those renting. Identifying the financial incentive to sell, many landlords have increased their rent costs, which has dramatically impacted renters in the city of Sydney. In fact, The Guardian reported that in 2021, there were only three rental properties in all of Sydney that a single person on jobseeker payments could afford – evidence that the housing market was failing those most vulnerable.
The spike in house prices during 2021 was fuelled by low interest rates and more mortgage lending during the Covid-19 pandemic.
Sydney’s property price explosion hit 25.3% in the 12-month period. While the city experienced a more dramatic price increase than other parts of Australia, prices were also climbing at an unexpected rate in Canberra, Adelaide and Hobart.
What happened in 2022?
After a year of property prices hitting remarkable heights in 2021, 2022 saw a predicted correction, though this correction was more brutal than many experts foresaw. To address the rise in property prices, the market’s value started to decline, with house prices falling at shocking speed. This was a convenient change for renters and first-time buyers but meant that many homeowners missed the selling bubble – getting less for their homes than in 2021.
In September 2021, the average home was selling for 1.8% less than the previous month. The collapse was 6.1% between July and September 2023, starting to address the hike that occurred in 2021.
What has happened so far in 2023?
Australians entered 2023 with high inflation rates, preventing many from saving the necessary funds to enter the housing market. This has subsequently affected the average price that a house in Sydney will sell for. Properties are staying on the market for longer, and fewer properties are appearing on the market.
The instability since 2021 has caused both buyers and sellers to exercise caution, since they are unwilling to commit to such a major financial milestone until the market becomes more stable.
What happens next?
It’s difficult to make clear predictions for the future, given the dramatic shifts that have been occurring since 2021. But there are signs that things are getting better.
Despite predictions of a further 9% fall in property prices during 2023, this at the very least provides some sense of stability, in that prices should continue to fall for now. With that stability, Australians will feel more comfortable making big financial decisions and you can expect to see houses appearing for sale more often and selling more quickly.
With bills set to fall during the summer, can we expect Sydney’s property market to drop or rise in value? The average Australian will start to have more disposable income again, meaning they’re more likely to invest in a first-time or new home. But the number of houses available will affect whether the prices rise or fall.
The bottom line: a volatile market with some hope
The Sydney housing market continues to be incredibly unpredictable and unstable. Because lots of mortgages were distributed in early 2021, the market experienced a dramatic change as prices hit new heights. As the market tends to do, it adapted to this in 2022 by bringing the value of properties crashing back down.
Evidence from 2023 so far suggests a continued fall in house prices, which, while troubling, at least provides a little more stability that will encourage people into the market.
