The Rising Price of Apartments in Sydney
With the limited supply of available properties, the demand for Sydney property is increasing. As a result, advertised rent prices have increased by 28 per cent year-on-year. The current trend in the Sydney property market is due to several factors. The demand for rental properties, limited supply of apartments, and the increase in interest rates, are all contributing factors to the rising price of apartments.
Renters per available property in Sydney increased by 28 per cent year-on-year
The Sydney rental market has experienced a strong increase in renters per available property over the past five years, and economists are predicting a further rise by the mid-2023 period. The reopening of international borders and the subsequent growth in investment activity are likely to spur demand for rental properties. Sydney’s rental market is still very tight, however, with demand outpacing supply. As a result, asking rents and gross rental yields have increased across the city. Despite the tight rental market, the number of available properties has decreased over the past five years. And there is no sign of any increase in the supply of rental listings in the city. This is one of the key reasons for Sydney’s ongoing tight rental market.
Demand for rentals and limited supply are leading to increases in advertised rent prices
A shortage of available rental stock has led to increased advertised rent prices in Sydney’s property market. Sydney is losing people to other capital cities and is struggling to build new homes, so the demand for rental properties is growing faster than supply. Meanwhile, construction costs are increasing, which is restricting supply and raising prices.
Apartment oversupply
In recent years, the Sydney property market has experienced an oversupply of apartments. This is the result of record levels of new development, a lack of tenants and low rental yields. This situation has led to concerns that the apartment market is stifling capital growth.
Interest rate rises
The housing market is experiencing a downturn as interest rates continue to rise, weighing on property prices. As a result, banks have passed on the increased costs of borrowing through higher loan rates. Currently, fixed rates are hovering between 4% and 5%. The rising cost of borrowing will increase the cost of property, cutting down on the maximum borrowing capacity. If the rate hike continues, this trend could worsen. Although recent data suggests the pace of price falls has slowed, some property experts still believe the impact will be significant and the market could stall for a while longer.
Weather
If you’re in the market for a property in Sydney, the timing is important. The spring market is traditionally the best time to buy, with pleasant weather and a flurry of open homes. But, spring also brings a larger supply of listings. According to SQM Research, the number of properties on the market rose by 22.5 per cent between September and October last year. As a result, the number of buyers who attend open homes is higher. Conversely, the winter market tends to be much less competitive, and prices are not pushed as high as spring.
Price declines
Recent data shows that the Sydney property market is experiencing a significant decline. The decline began in May and is now in its fourth month. The rate of decline is comparable to the sharp downswing in the early 1980s and the 2008 global financial crisis. This means that Sydney property values are declining at their fastest rate in 40 years according to Sydney real estate agents.
Smaller markets
The Sydney property market is undergoing a slowdown in the wake of the recent rate hikes and soaring inflation. This has affected buyers’ confidence, and this has affected the value of the properties on the market. According to CoreLogic’s Mapping the Market tool, 41.9 per cent of markets have decreased in value. The Sydney and Melbourne property markets have experienced the biggest falls.
Price surges
In Australia, the latest figures showed house prices rose at their fastest rate in 17 years in February. This is largely due to low interest rates, and the shortage of available housing. The surge in demand has caused many sellers to refrain from listing their properties, fearing they will lose money.
Clay Chigwidden