Australian Property Market Struggles Amid Global Relegation, While Sydney Listings Rise

The Australian property market faces significant challenges, with its cities lagging behind in the global property market, according to the Knight Frank Global Residential Cities Index for Q1 2023. On the other hand, a rise in property listings in Sydney and other major cities promises a more positive outlook.

Australia’s Property Market in Global Relegation Zone

In a hypothetical “Property Market World Cup,” not a single Australian city would qualify for the 2023 tournament, according to an analysis by Craig Francis. The annual residential dwelling increase of 6.0% in Adelaide ranks 35th among 150 cities, while Sydney, Melbourne, and Hobart find themselves facing relegation to the lowest league, as reported by the Knight Frank Global Residential Cities Index.

The index shows that Australia’s state capitals are nowhere among the top 32 cities in the world, echoing the lackluster performance of international property markets. Knight Frank’s Global Head of Research, Liam Bailey, commented on the global situation, stating, “Our latest results confirm that more than half of key global city markets saw prices fall in the most recent three-month period” (Francis).

Sydney, Melbourne, and Hobart, for example, ranked 138th, 136th, and 143rd respectively, with negative growth. As Francis noted, the global average annual growth across the 150 cities was a mere 3.1% in Q1 2023, down sharply from the previous peak of 11.6% in Q1 2022.

However, the future may bring a turn of the tide. “Economic fundamentals – wage growth and economic expansion – should permit a return to growth for most markets from 2024,” according to Mr. Bailey (Francis).

Sydney Property Listings Rise, Offering Hope

Contrary to the overall grim outlook, property listings across Australia’s largest cities, including Sydney, have seen a promising increase. According to the PropTrack’s Listings Report July 2023, listings have leapt by over 9%, signaling a potential recovery, as reported by Henry Thai.

PropTrack senior economist Angus Moore observed, “Property market activity is showing early signs of picking up in Sydney and Melbourne amid what is typically the quieter winter season.” He added, “Home prices, nationally, posted the seventh consecutive month of growth in July and have recovered 2.8% since December. That means home prices nationally are now sitting just 1.4% below the March 2022 peak” (Thai).

This surge also translated into a 10% increase in attendance at open inspections in July and points towards an advantageous opportunity for sellers and investors alike. Raine & Horne’s head of property management, Maria Milillo, noted the current environment makes spring “a strategic time for investors looking to rebalance their portfolios by listing their properties on the market” (Thai).

The contrasting scenarios paint a complex picture of Australia’s property market. While globally the market seems to struggle, the localized uptick in Sydney and other cities gives reason for optimism. The resilience of the property market, coupled with anticipated improvements in economic conditions, offers hope that the relegation Australia is facing might be temporary.

Investors, sellers, and buyers should keep an eye on the evolving landscape. As John Katergarakis, head of property management at Raine & Horne Green Square and Bexley/Beverly Hills, points out, spring will present a favorable opportunity for real estate investment in certain regions of Sydney (Thai).

With interest rates projected to fall in 2024 and the global economy showing signs of recovery, Australia’s property market may be poised for a comeback. Whether it can climb out of the relegation zone in the global arena remains to be seen.

References:

Francis, Craig. “In property market World Cup, Sydney and Melbourne in relegation zone.” https://www.apimagazine.com.au/news/article/in-property-market-world-cup-sydney-and-melbourne-in-relegation-zone 

Thai, Henry. “Sydney property listings rise ahead of spring 2023.” https://thepropertytribune.com.au/market-insights/sydney-property-listings-rise-ahead-of-spring-2023/