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From rental rates to mortgage pressure, here are five shifts Sydney can expect next year.
Mark Foy, founder and principal of McGrath Surry Hills, has unveiled his top five predictions for Sydney’s property market in the upcoming year.
As Australia’s most famously competitive property market, Sydney has been the subject of heavy discussion over the last month.
Tim Reardon, economist at the Housing Industry Association, has predicted a further drop in new home starts; SQM Research has forecast a 4 per cent fall in dwelling prices; and PRD Real Estate suggested that now is the time for Sydney house hunters to strike.
But according to Mr Foy, the Sydney housing market will see a complex mix of dynamics, with performance varying across the city’s diverse property landscape.
“Sydney’s 2024 property market will witness an intriguing interplay between rising interest rates, escalating rental prices, and varying performances across property value segments,” said Mr Foy, who has over 20 years of experience in the Sydney market.
He revealed that “the synergy of these elements will define market dynamics, influencing buyer behaviour and investment decisions”.
Here are the top five trends Mr Foy has predicted for 2024.
1. Interest rate movement
For the first two quarters of 2024, Mr Foy predicted that interest rates will continue their upward trajectory.
With 13 rate hikes having taken place since May 2022, buyers and renters are already facing substantial pressure. Mr Foy shared that the adjustment in rates is expected to continue to influence both the purchasing power and decisions of prospective buyers.
2. Rental market surge
According to Mr Foy, rents across Sydney – already sky-high – are projected to experience a marked surge of 10–15 per cent in 2024.
He emphasised that this anticipated increase in rents may impact rental affordability, which would in turn influence the decisions of both tenants and landlords alike.
3. Stagnation in lower-priced properties
Properties that are priced below $1.2 million tend to be largely reliant on finance, and Mr Foy forecasted that these mid-range properties are likely to witness a period of stagnation in the year to come.
4. Resilience of high-value properties
In contrast to the middle rungs of the market, high-valued properties over $2.5 million are expected to continue performing well, especially in city fringe areas.
With a range of diverse property types in this market segment, including spacious apartments for those seeking to downsize, Mr Foy prophesied that the high end of the property market has a strong chance of sustaining its momentum.
5. Stock levels and mortgage pressure
Finally, Mr Foy predicted that the Sydney is expected to remain a low-stock property market going into 2024.
While mortgage pressures may influence some home owners to sell, Mr Foy noted that any increase in stock levels is likely to be slight, perpetuating a “delicate balance” between supply and demand.
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