By the end of 2023, the median house price in Sydney bounced back impressively. According to CoreLogic, Sydney houses ended the year sitting at $1,400,630, while units finished at $834,578. This showed a remarkable annual price growth of 12.5% for houses and 7.7% for units, proving the housing market has fully recovered from its 2022 downturn.
But what exactly contributed to this strong recovery? According to experts, there are several factors at play.
Economic indicators
Forward estimates for the NSW state economy project a surplus of $333 million in 2024-25, which is expected to increase to $1.166 billion in 2025-26. This indicates a strong economic outlook, with potential flow-on effects for the property market. At just 3.27%, NSW’s unemployment rate is also below the national average, further boosting consumer confidence and spending power.
Interest rates on pause
While the Reserve Bank of Australia (RBA) decided to keep interest rates on hold at 4.35% in December 2023, they also strongly hinted at the possibility of further increases coming in 2024. However, many economists are tipping the likelihood of a rate cut in 2024, rather than additional increases. Interest rates on pause would see potential buyers entering the market before rates potentially rise again, contributing to increased demand and prices.
Infrastructure developments
Sydney’s economic growth is expected to be boosted by major infrastructure projects like the Western Sydney Aerotropolis, Sydney Metro, and the Western Harbour Tunnel. These projects will create jobs, attract businesses to the city, as well as enhance transportation and connectivity, contributing to Sydney’s overall livability and attractiveness.
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Population growth
Sydney is expected to see an influx of 1.6 million people in the next 20 years, with 900,000 of them settling in Western Sydney. This significant growth means both businesses and residents will be drawn to the area, increasing demand for property and driving prices upwards.