Sydney Property Market Forecasts: What’s Next for Buyers and First Home Owners?

Sydney’s property market has seen significant fluctuations in recent times, with predictions indicating a moderation of home values across 2024. Based on insights from industry experts, there are several influencing factors and trends to consider as the year unfolds.

Moderating Home Values

Forecasts for the Sydney property market indicate that while home values could grow between 3% to 10% by the end of this year, growth is expected to drop by about four percentage points in 20241. Daniel Ho, Juwai IQI co-founder and group managing director, said, “We always found the forecast of 8% price declines in 2023 too aggressive. The Australian market is in much better shape than most analysts give it credit for”. This sentiment was echoed by property expert Lloyd Edge, who noted that “There is a lot of strength still in the property markets, despite the rising cost of living, and the uncertainty on where interest rates will land”.

Factors Influencing the Market

A significant factor affecting the property market is the imbalance between supply and demand. REINSW CEO, Tim McKibbin, highlighted that “The market’s most significant influence at the moment is the huge imbalance between supply and demand, and this will not change in the short term”1. The shortage of housing stock, coupled with factors like population growth and immigration, will likely keep prices buoyed for some time.

The Role of International Students and Investors

International students, especially from China, have emerged as a significant buyer group. Fiona Yang, Plus Agency’s executive partner, mentioned that due to the Chinese government’s recent directive for students to attend classes in person in Australia, many students have moved, leading their families to consider buying properties. Yang predicts that while house and townhouse prices might climb further, prices for smaller apartments might remain flat or decrease.

Predictions for Various Sydney Markets

Kent Lardner of Suburbtrends provided insights into various SA3 regions in Sydney, categorizing them into five groups based on inventory and predicted growth1. Regions like Carlingford, Leichardt, and Canada Bay are expected to see robust growth by the end of the year. However, certain areas, including Auburn, Hornsby, and Kogarah-Rockdale, are poised delicately, favoring neither the seller nor the buyer.

First Home Buyers Face Challenges

A concerning trend for aspiring homeowners is the projected wait time to enter the property market. According to Finder analysis, a first-home buyer in NSW would take an average of 20 years to save enough for a deposit, pushing their house purchase to 20532. This is based on modeling that assumes a 3.5% annual growth on home prices, a 3% average savings interest rate, and 3.5% annual growth in the median household income.

Richard Whitten, a home loans expert at Finder, emphasized the challenges first-home buyers face, noting, “Property prices have grown at a faster rate than incomes over the past few decades. Being able to save enough for the upfront deposit is a huge barrier to overcome”.

With rising property prices, supply-demand imbalances, and the influx of international students and investors, the Sydney property market remains in a state of flux. While there are challenges, especially for first-time homebuyers, understanding the market’s intricacies will be crucial for making informed decisions.

References:

“Sydney property market predictions: How will the next six months play out?” by Henry Thai. https://thepropertytribune.com.au/market-insights/sydney-property-market-predictions-how-will-the-next-six-months-play-out/ 

“Average new Aussie first-home buyer won’t get into property market until 2049: Finder” by Aidan Devine. https://www.realestate.com.au/news/average-new-aussie-firsthome-buyer-wont-get-into-property-market-until-2049-finder/