Sydney Property Market 2024: Market Wrap Up

Sydney Property Market Wrap 2024 

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In 2024,Sydney’s property market experienced significant shifts influenced by economic factors, buyer sentiment, and evolving supply-demand dynamics. Early in the year, the market experienced a rebound, with home values rising and sales activity increasing. However, as the year progressed, several factors contributed to a cooling trend. The market demonstrated clear segmentation, with premium properties showing resilience while the broader market experienced moderating conditions.

Below we looked at CoreLogic Property Data to highlight the key trends throughout the year that shaped opportunities and challenges for buyers.

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Market Overview and Performance

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1) Home Values    

• Sydney’s dwelling values rose by2.5% year-to-date by September 2024, marking slower growth compared to the 5.3% annual increase in 2023. This deceleration created improved conditions for strategic buyers, particularly in the year's second half.
• Following a peak mid-year, the latter half of 2024 saw monthly declines of up to 0.4%, ending with a modest overall annual increase of approximately 1.8% across the city. This stability provided buyers with increased negotiating power compared to previous years.
• The Sydney market displayed at wo-speed dynamic, with prestige properties experiencing robust growth, while middle and lower-tier markets saw subdued performance.

2) Median Property Prices

• Houses: The median house price in Sydney reached $1.38 million in December, up slightly from $1.35 million in January 2024.
• Units: Median unit prices hovered at $850,000, presenting opportunities for buyers priced out of the house market.

3) Sales Volumes

• Approximately 394,000 homes were sold nationwide by November 2024, representing a 10.4% increase year-on-year, with Sydney accounting for a significant proportion of these transactions.
• Transaction volumes softened inQ4 as demand slowed, with properties taking an average of 39 days to sell, up from 34 days in Q2 2024.

4) Clearance Rates

• Auction clearance rates in Sydney dropped to 62% in November, compared to 73% in early 2024, reflecting cooling demand.

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Key Market Drivers

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1) Interest Rates

• High interest rates continued to impact buyer demand, with expectations of a 'shallow' rate-cutting path potentially influencing market activity in2025.
• The cash rate peaked at 4.35%and resulting average variable mortgage rates of 6.25% significantly impacted buyer borrowing capacity and market sentiment, particularly among first-home buyers.

2) Affordability

• By Q3 2024, housing affordability in Sydney had worsened, with the ratio of median dwelling value to median household income increasing to 8.1 times, the highest among capital cities. This, coupled with cost-of-living pressures, affected buyer capacity and sentiment.

3) Supply Levels

• An increase in new listings, reaching a three-year high, contributed to the cooling market, providing buyers with more options and reducing urgency
• New listings increased by 12.5%year-on-year, reaching a three-year high by November. This rise insupply  eased competition and provided buyers with expanded choice. And greater leverage.
• Despite the increase in new listings, total stock levels remained 13% below the five-year average, reflecting lingering supply constraints from prior years.

4) Investor Trends

•  Investor activity was tempered by declining rental yields, which fell from 3.5% in January to 3.1% by December 2024, as property prices outpaced rent growth.
• Sydney saw a 7% reduction in investor loan approvals, reflecting reduced investor appetite in the Sydney market.

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Rental Market Insights

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1) Vacancy Rates

• Sydney’s vacancy rates rose to 1.8%in November, up from 1.4% in early 2024, as new rental stock entered the market.
• Despite the increase, vacancy rates remained tight compared to the pre-COVID five-year average of 2.6%,indicating persistent demand.

2) Rents

• Median rents for houses and units increased by 5.6% year-on-year, driven by population growth and a surge in migration.
• This rental growth pushed median weekly rents to $710 for houses and $575 for units, causing additional cost-of-living pressures.

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Strategic Opportunities for Buyers in 2024

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1) Increased Negotiation Power

• The rise in listings and slower market conditions have presented buyers with better opportunities to negotiate on price and terms, particularly in mid-to-late 2024.

2) First-Home Buyer Benefits

• Government incentives such as the First Home Buyers Assistance Scheme remained a key driver in the owner end of the market, offering stamp duty concessions for properties under $1.5 million.

3) Opportunities in Growth Corridors

• Outer-ring suburbs, supported by infrastructure projects like the Western Sydney Airport and Metro expansions, provided affordable entry points with strong long-term potential.

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Challenges for Buyers

1) Affordability Pressures

• Despite the cooling market, Sydney remains Australia’s least affordable city, with significant barriers for entry-level buyers.‍

2) Interest Rate Volatility

• Buyers faced uncertainty about future rate cuts, with expectations that the RBA may now not begin easing monetary policy until mid-2025, this has impacted buyer confidence and borrowing capacity.

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2025 Outlook and Recommendations

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Market Projections

We anticipate further market moderation in early2025, with potential for recovery in the latter half, contingent on:

• Expected interest rate movements
• Economic conditions and consumer confidence
• Supply-demand balance
• Migration patterns and population growth

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Our Strategic Recommendations for Buyers are:

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• Focus on areas benefiting from infrastructure development

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  Leverage current market conditions for improved negotiating position

• Consider counter-cyclical opportunities in the unit market

• Maintain strong due diligence despite reduced competitive pressure
• Structure purchases to account for potential interest rate movements

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The 2024 market transition has created a more favourable environment for strategic buyers. While challenges persist, particularly around affordability and financing, opportunities exist for well-prepared buyers to secure quality assets under improved conditions. The outlook for 2025 suggests a continuation of these buyer-friendly conditions, at least in the near term.