What Buyers Need To Know About The Market Right Now
The reality of today’s property market is both more nuanced and more positive than the headlines suggest.
Read the media headlines, and you’d be forgiven for thinking the Sydney property market was gone forever. However, the reality is both more nuanced and more positive than you might think.
We explore the seven things every buyer should know about the eastern suburbs real estate market right now.
1. The headline data may not make for good reading…
It’s true that Sydney’s median property value fell -13.8% to $999,278 in the year to January 2023, according to CoreLogic. And the news was even worse for the median house value, which fell -15% to $1,205,618. Meanwhile, the median apartment value fell -10.4% to $772,807.
Already, that makes this the biggest price decline for the Sydney market on record after the 2017-2019 market slump, when prices fell -14.9%. However, that took almost a full two years to play out. This has happened in just one year, with prices falling every one of the past 12 months.
We’ve noticed this has caused a lot of would-be buyers to hold off, so they can wait and see where prices will land.
2. But it’s not all bad news
And yet, despite these falls, it’s not all bad news for the local property market. For starters, the current conditions need to be put in context. Just before prices started falling, we went through an unprecedented boom, with Sydney’s median property value rising 27.7% from mid-2020 to the end of 2021.
Anyone who bought before that growth cycle (or even partway into it) is likely to be well ahead, despite any recent falls.
It’s also worth remembering that Sydney’s market doesn’t act in unison. Some suburbs, property types and markets remain strong.
This is most obvious in the prestige market, where we’re still seeing a high level of buyer demand, which has led to several street and suburb records over the past year.
We’re also seeing strong demand for particular parts of the eastern suburbs. And, as the table below shows, several suburbs have recorded gains over the past 12 months, even as the market fell more broadly.
| Suburb | Median house value | Growth | Median apartment value | Growth |
|---|---|---|---|---|
| Woollahra | $4,800,000 | 3.4% | $1,575,000 | 16.6% |
| Rose Bay | $6,000,000 | 13.5% | $1,653,000 | 14.2% |
| Bellevue Hill | $8,700,000 | 14.5% | $1,603,000 | 10.6% |
| Bronte | $5,725,000 | 2.2% | $1,615,000 | 10.2% |
| Tamarama | n/a | n/a | $2,575,000 | 5.1% |
| Darling Point | n/a | n/a | $2,540,000 | 5.4% |
* Source: Realestate.com.au suburb profiles, accessed 13 Feb 2023
3. You’ll 3generally have more choice
Despite values in some suburbs actually rising over the past year, for the most part, the heat that was in the market over 2020 and 2021 has well and truly gone.
The frenetic activity and fear of missing out (FOMO) are no longer with us, and properties are generally taking longer to sell.
That’s good news if you’re looking to buy because you’ll often have more time to make a decision and to be more selective. And, given we tend to hold onto our properties for an average of around a decade, it’s vital that you get your next move right.
4. This is a good time to upsize
Most people wait until the market is rising before buying their next home, because they’re also selling. But, actually, it’s usually much better to move up the property ladder in a flatter market.
That’s because when property prices fall, the gap between prices tends to narrow.
Say, for instance, your current home is worth $2 million, and the home you want to buy is worth $3.5 million – a gap of $1.5 million. If both property values fall by 15%, your home is now worth $1.7 million, but the home you want to move into is worth $2.975 million – a gap of $1.275 million. That’s over $200,000 less you’d need to borrow – an important consideration in light of recent interest rate rises.
5. It’s also potentially a good time to invest
As property values took off over 2020 and 2021, investors were notably absent from the market. One of the critical reasons for this was that Sydney property wasn’t providing much in the way of income. In fact, the citywide yield on houses fell as low as 2.5% in late 2021.
With prices down and rents rising rapidly, the equation is also quickly changing. Today, CoreLogic reports that Sydney houses are turning 2.8% while houses are returning 3.9%. This is likely to increase further still, given the strong demand for rental properties across the city.
6. And it’s a great time to be a first-home buyer
First-home buyers may also find the current market a better one in which to get onto the property ladder.
As the median Sydney dwelling value has fallen, the cost of getting into the Sydney market has also come down. And, as we recently argued, it’s comparatively cheaper to get a foot in the door of the Sydney property market today than it has been in decades, so long as you’re prepared to start out in an apartment.
What’s more, one of the hardest parts of entering the property market in recent years has been not servicing a mortgage but saving a deposit. Lower property prices combined with generous state and federal government subsidies means this may be easier too.
7. The market will eventually turn…
Finally, it’s always worth remembering that in the short-term, the Sydney property market moves both up and down, but the long-term trend for property values in our city is that they tend to rise. Even if today’s flat conditions persist for some time, prices will eventually turn, and history shows that, when they do turn, they’re likely to turn rapidly.
With that in mind, it’s usually best to buy now, when conditions are slow, rather than waiting for them to run away once more.
Want more?
If you’re thinking about buying or selling property in the Eastern Suburbs, don’t hesitate to get in touch with our team today.