01.10.2024 Local News

What To Expect From The Property Market In 2024

What To Expect From The Property Market In 2024

2023 was a strong year for the Eastern Suburbs property market.

Should we expect the same in 2024?

2023 was a strong year for the Eastern Suburbs property market and, with similar fundamentals underpinning the market as we enter 2024, we don’t expect a significant change.

Whether you’re looking to upgrade your property, downsize, invest, or take your first steps on the property market, 2024 should present some great opportunities.

Before we look at the year ahead, it’s interesting to cast an eye back to remember what’s happened over the past four years.

In 2020, Sydney property prices got off to a strong start. Then the COVID-19 pandemic hit and values fell before recovering once again to record annual growth of four percent. Just a year later, at the end of 2021, we’d experienced a remarkable year, during which Sydney median property value rose an incredible 25%.

In contrast, over 2022, prices fell of -9.5% across Sydney, as the market recalibrated. That said, we still saw some exceptional gains in Sydney’s East, and losses were not felt across the board.

Last year, in 2023, the market returned to growth mode again – although it was steady growth when compared with 2021.

CoreLogic’s National Home Values Index shows Sydney’s median home value hit $1,125,533 in December and that prices rose 11.3% over the year.

These observations reveal several things, not least of which is the variability of one year to the next in the property market. They also show how the pandemic and the subsequent record low interest rates and other fiscal stimulus impacted property prices.

Finally, they illustrate how we’ve returned to a more traditional market with typical levels of growth, rather than the highs and lows of the past four years.

Over 2023, the Eastern Suburbs property market was underpinned by solid fundamentals. There was strong buyer demand (particularly for apartments), healthy competition but not too much FOMO and a reasonable supply of listings (but not too much), especially when compared with the previous few years. This led to good prices being achieved across a range of property types.

One constant: the rise and rise of prestige property

A constant factor in the market over the past four years has been the continued rise of the prestige property market, from luxury apartments to record-breaking houses.

As we enter 2024, this sector seems to remain as strong as ever in the Eastern Suburbs. That’s likely because prestige buyers are typically unaffected by interest rate rises, which may have slowed down other market segments. There is also a significant undersupply of these types of properties, compared to the enormous demand.

CoreLogic’s Best of the Best Report for 2023 showed houses in Bellevue Hill dominated the Top 10 most expensive sales in Australia last year, taking out half of the available positions. Meanwhile, Vaucluse took out a further two.

This means the Eastern Suburbs accounted for seven of the 10 most expensive homes sold around the country last year, with properties on the list ranging from $33 million to $76 million. This performance also resulted in Bellevue Hill being crowned the most expensive suburb for houses (Point Piper took the top spot for units).

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We are not alone in expecting the demand for prestige property to continue in 2024. Knight Frank’s Global Prime Residential Forecast forecasts Sydney will have the highest growth in luxury residential property prices of all the Australian cities this year, and expects values to grow by five per cent.

Other market segments

Two buyer groups we didn’t see a lot last year were investors and first home buyers. This is likely the result of rising sales prices coupled with rising interest rates.

With some hope that rates will begin to come down this year, perhaps we will see more activity from these demographics in 2024.

What we do expect to see next year is ongoing activity from downsizers. They have been a consistent part of the Eastern Suburbs property market for many years now – and with too few properties to satisfy demand we know they will continue to shape the market, particularly when it comes to large apartments.

The expert view

The Big Four banks have put out their own forecasts for the property market over 2024, with CBA and ANZ forecasting a 4% rise in median prices for Sydney. Meanwhile, NAB predicts 5% and Westpac 6%. This is in line with a typical growth market, and a continuation of the type of market we witnessed towards the end of 2023.

Realestate.com.au’s PropTrack Property Market Outlook Report, released in December forecasts Sydney prices will rise a steady 2% to 5% in 2024. It also argues that buyers with larger deposits (ie: upsizers) have been relatively insulated from the higher interest rate environment and found it easier to transact in 2023. They will remain in a good position for 2024.

The report also highlights that affordability (rather than lifestyle) may continue to push more buyers out of cities and to regional areas. A key problem here is that development of new housing stock simply isn’t keeping pace with demand.

As Domain speculates, economic factors such as lack of affordability, rising unemployment or continued inflation could still have a negative impact on prices in 2024. On the flipside, a potential cut in interest rates could increase buyer demand and drive prices higher.

In fact, we’re already experiencing lower than normal supply with a rising population – conditions which should cause prices to increase.

CoreLogic puts it simply: “Even markets with very strong performance could see a reduction in the pace of growth through 2024”.

However, like the other commentators, they’re still forecasting growth.

Want more?

If you’re looking to buy in 2024, keep an eye on our properties for sale and register for off-market listings.

If you’re interested in buying or selling in Sydney’s Eastern suburbs, get in touch.