Sydney home prices are expected to grow by as much as 23 per cent over three years, according to new data.
The report from property industry analyst and economic forecaster Oxford Economics Australia predicts relatively slow home price growth will persist across Sydney for the remainder of the 2024 financial year before gaining pace in both FY25 and FY26.
According to the Residential Property Prospects report, which forecasts property prices and the rental market to 2026, unit price growth in Sydney will outpace that of house prices through to the end of June 2026.
Oxford Economics expects unit prices will grow by 23.4 per cent over that period, with house prices expected to rise by 15.8 per cent.
That would take Core Logic's Sydney's median unit value past the $1m figure to $1,029,869 and the median house price past the $1.5m mark to $1.621930.
“Capital city performances have diverged in recent months. Total listings have risen in Melbourne and Sydney, a trend we expect will continue in coming quarters, acting to slow price growth,” said Maree Kilroy, report author and Senior Economist at Oxford Economics Australia.
“Tailwinds will serve to propel prices in Perth, Brisbane, and Adelaide. Low levels of advertised listings and affordability in pockets will prop up prices in these cities next year. “Interest rate cuts from late 2024 should boost credit availability, accelerating broad price growth once again.”
In regards to Sydney: “Increasing an estimated 10.3 per cent over 2023, Sydney's median house price is estimated to have exceeded its previous peak in the December quarter 2023, reaching $1.6 million,” the Oxford Economics Australia report reads.
“However, the pace of growth is slowing; a function of an additional interest rate lift in November and rising total listing volumes. Fading demand stamina is showing through in softening auction clearance rates.”
The report from Oxford Economics Australia expects this trend to continue through early 2024, resulting in house price growth of only 3.3 per cent, and 5.2 per cent for units in FY2024.
“With the context of a growing dwelling stock deficiency, the return of interest rate cuts will drive the next acceleration of price growth from late-2024 onwards,” said Kilroy.
Oxford Economics Australia expects the relatively cheaper price point of units to help back stronger growth near term. Sydney's median house and unit price are forecast to increase 5.9 per cent and 8.3 per cent per annumc respectively over the two years to June 2026.
Moves made by the Albanese Government, including increased taxes for foreign purchases and doubling the vacancy fee for homes owned by overseas investors, is expected to have a modest impact upon the Sydney real estate market and be confined to specific Sydney postcodes, many at the top end of the market.
According to the January's PropTrack Home Price Index, “ “Several factors contributed to the slowdown in home prices over the last quarter of 2023.
“There was an additional interest rate rise as well as an increase in the supply of homes listed for sale, which provided buyers more choice and helped to alleviate competition.
“Despite regional areas experiencing higher growth in December, combined capital city areas were the clear outperformers in 2023, with prices up 6.44% over the course of the year versus 3.2% in the rest of state markets.
“Even though recent months have seen a rise in the number of properties listed for sale, overall supply remains relatively constrained, particularly in Perth and Brisbane. This has been a key contributor to price rises in these markets.
“Despite the cool down in capital city prices seen over December, prices in 2024 will be supported by population growth and what looks likely to be a more stable interest rate environment.”
*** Credit - James MacSmith - Realestate.com ***