The Sydney Property Market Forecasts & Review – Investment Outlook for 2024

The Sydney property market is off to a rapid start in 2024, as evidenced by the latest auction and sales results. Last week alone, 75 property sales in Sydney exceeded the one million dollar mark. This impressive figure showcases the momentum of the market and highlights the continued demand for high-value properties in the city.

But what can we expect for the remainder of 2024? Will the Sydney property market continue to thrive or will we see a slowdown in growth?

Sydney Property Market in 2023

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.

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.

2023 Property Prices

Housing Market Trends

Sydney’s housing market is displaying robust growth as a result of increased buyer confidence and improved economic conditions. Suburbs within 20km of the CBD, particularly in the Eastern Suburbs and Northern Beaches, are witnessing significant price appreciation. Western Sydney is also experiencing steady growth, thanks to not only its affordability but also major infrastructure developments like the Western Sydney Airport.

Apartment Market Trends

Compared to the strong growth in the housing market, Sydney’s apartment market is experiencing a more subdued growth trajectory. However, with the slowdown in apartment construction and increasing demand for affordable housing options, this sector will likely see strong growth in the coming years.

Where were the most sought-after investment properties or suburbs in Q1-Q3 2023?

Upper North Shore

Sydney’s Upper North Shore remains a highly sought-after area for property investment due to its prestigious schools, family-friendly environment, and strong community. With beautiful parks, large land sizes, and an easy city commute, it has experienced stable price increases over the years. Positioned in the middle ring of the CBD, the Upper North Shore showed stable growth and resilience during the pandemic, making it a safe option for investors.

Lower North Shore

Catering to young professionals, the Lower North Shore boasts beautiful waterfront properties and a vibrant cosmopolitan lifestyle. Its proximity to the city center makes it highly desirable for those working in the CBD. With strong demand from both owner-occupiers and investors, this area is expected to experience steady growth.

Inner West

The Inner West has become increasingly popular due to its eclectic mix of modern apartments, terrace houses, and traditional workers’ cottages. With vibrant cafes, restaurants and a lively arts scene, it has become a hub for young professionals and families looking for a convenient lifestyle. The area is also well connected with public transport, making it an attractive option for investors.

Tips for Investing in Sydney in 2024

Focus on Inner and Middle-Ring Suburbs

  • Look for properties in areas with convenient access to essential amenities, beaches, parks, and vibrant local hubs.
  • Aim for a 20-minute neighbourhood, where necessities are within easy reach, enhancing the overall quality of life.

Consider Long-Term Capital Growth:

  • Emphasise the importance of capital growth over immediate cash flow in property investment.
  • Choose well-located properties in Sydney’s inner and middle-ring suburbs, leveraging the long-term potential for increased value.

Strategic Property Selection:

  • Follow a strategic approach, considering factors like intrinsic value, historical capital growth, rental yields, and potential for future development.
  • Consider properties with unique features such as water views, exclusive location, or heritage charm that can potentially drive up its value.

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