The Sydney property market continues to show steady growth in October 2024, despite ongoing economic challenges such as high interest rates and cost-of-living pressures. Limited supply and sustained demand are driving the market, particularly in more affordable housing segments like units. Here’s an analysis of Sydney’s property market performance based on the latest CoreLogic data.
Market Overview
In October 2024, Sydney’s property market recorded a 0.2% increase in dwelling values, bringing the annual growth rate to 4.5%. The median dwelling value now stands at $1,188,912, reinforcing Sydney’s position as the most expensive capital city in Australia.
Houses in Sydney saw a marginal increase of 0.1% for the month, while unit values outpaced this with a 0.6% rise. The growing demand for units is a reflection of affordability pressures, with many buyers now focusing on more affordable property types as house prices remain high.
Auction Clearance Rates & Sales Activity
Auction clearance rates in Sydney averaged around 60% in October, slightly lower than last year, but still indicating solid buyer competition in key areas. Sales volumes have seen a moderate uptick, particularly as more listings hit the market during the spring season. Buyers now have a little more room to negotiate, with homes staying on the market slightly longer than earlier in the year.
Rental Market Dynamics
Sydney’s rental market remains tight, with vacancy rates at 1.6%. This constrained supply is driving rental price growth, although rent increases have eased slightly. The median rent for houses in Sydney is $670 per week, while units are renting for $530 per week. Rental yields are also attractive for investors, sitting at 4.0% for units and 3.1% for houses.
Factors Shaping the Sydney Market
- Economic Conditions: High interest rates and inflation continue to challenge buyer affordability, but Sydney’s property market remains resilient. The expectation of potential interest rate cuts in the coming months could ease some pressure on buyers and stimulate further activity.
- Supply Constraints: The Sydney market is still suffering from low housing supply, with construction delays due to labour shortages and high building costs limiting new development. This lack of supply is one of the key factors holding property values steady.
- Population Growth: Ongoing population growth in Sydney continues to drive demand, especially in rental markets. Migration has played a significant role in keeping demand high, particularly for units in more affordable areas.
Challenges & Opportunities
Sydney’s affordability crisis remains a major issue, especially for first-home buyers. The time required to save for a deposit has increased, and mortgage repayments are eating into household incomes at record levels. However, the limited supply of new housing, especially in central areas, is likely to support property values moving forward.
For investors, Sydney’s rental market offers continued opportunities. The combination of low vacancy rates and solid rental yields, especially in the unit market, makes it an attractive proposition. Additionally, with potential interest rate reductions on the horizon, buyer sentiment could improve, leading to more activity across the market.
Summary
Sydney’s property market in October 2024 continues to show resilience and steady growth, with marginal increases in dwelling values and strong rental demand. While affordability remains a challenge, particularly for first-home buyers, the fundamentals of limited supply and high demand are likely to support the market in the near term.
For investors, the unit market presents a strong opportunity, offering good rental yields and long-term growth potential. As a buyer’s agent at Rose and Jones, I advise clients to stay informed and keep an eye on potential rate cuts, which could further shape the market in the coming months.