Property Market Trends

The Sydney housing market has been experiencing significant changes in property values, with a notable gap widening between house and apartment values(4). This trend reflects a growing preference for houses over apartments, possibly influenced by lifestyle changes post-pandemic. Additionally, the market has seen an increase in short-term loss-making resales, particularly for properties held for three years or less, indicating a shift in investment strategies and possibly reflecting the impact of rising interest rates(6).

Rental Prices

Rental prices in Sydney continue to be a concern, with increases outstripping supply and leading to a lower rental vacancy rate(9). This trend is fueled by strong demand and a lack of new housing stock, suggesting that rental prices are likely to continue rising in the near future.

Supply Shortages

The Sydney housing market is facing a supply shortage, which is contributing to the rising property and rental prices. New dwelling approvals are at near-decade-low levels, exacerbated by increases in material and labor costs since the pandemic onset(9). This shortage is a significant factor in the current market dynamics and poses a challenge for future affordability.

Economic Outlook

The economic outlook for the Sydney housing market is mixed. On one hand, there is an expectation of a more stable interest rate environment in 2024, which could make property investment more attractive(9). On the other hand, the broader economy is expected to slow, and the unemployment rate is anticipated to increase, which could impact the rate of price growth in the housing market(9).

Government Actions

The government has been active in addressing some of the challenges in the Sydney housing market. Notably, the federal government’s new “help to buy” laws aim to assist up to 40,000 Australians to purchase a property with as little as a 2% deposit(5). Additionally, the Albanese Government is adjusting the foreign investment framework to boost Australia’s housing stock, including tripling foreign investment fees for the purchase of established homes and cutting application fees for foreign investment in Build to Rent projects(3).

Potential Solutions

One innovative solution to the housing affordability crisis is the adoption of building groups, inspired by German baugruppen. This approach has shown success in Australia, with members saving an average of 10% on their new home building costs(2). Such collective building initiatives could be a viable solution to create more affordable housing options.

Conclusion

The Sydney housing market is currently characterised by rising property and rental prices, supply shortages, and a complex economic outlook. Government interventions, such as the “help to buy” scheme and adjustments to foreign investment policies, are steps towards addressing these challenges. Additionally, innovative solutions like building groups offer promising alternatives for affordable housing. As the market continues to evolve, it will be crucial to monitor these trends and policies to understand their long-term impact on the housing landscape in Sydney.

1. [Expert hacks to take the stress out of moving house – Domain](https://www.domain.com.au/news/expert-hacks-to-take-the-stress-out-of-moving-house-1253833/)
2. [Want to cut your new home costs by 10% or more? That’s what building groups can do – The Conversation](https://theconversation.com/want-to-cut-your-new-home-costs-by-10-or-more-thats-what-building-groups-can-do-212458)
3. [Higher foreign investment fees for housing at same time will cut application fees for foreign investment in Build to Rent projects – The Real Estate Conversation](https://www.therealestateconversation.com.au/2023/12/10/higher-foreign-investment-fees-housing-same-time-will-cut-application-fees-foreign)
4. [Gap between house and apartment values widens – SMH](https://www.smh.com.au/property/news/gap-between-house-and-apartment-values-widens-20231212-p5eqst.html)
5. [Australia’s ‘life changing’ 2 per cent property deposit scheme is a step closer – Domain](https://www.domain.com.au/news/australias-life-changing-2-per-cent-property-deposit-scheme-is-a-step-closer-2-1255229/)
6. [Short term loss-making resales continue to rise – CoreLogic](https://www.corelogic.com.au/news-research/news/2023/short-term-loss-making-resales-continue-to-rise)
7. [2023: Resilience, recovery and an unlikely upswing – CoreLogic](https://www.corelogic.com.au/news-research/news/2023/2023-resilience-recovery-and-an-unlikely-upswing)
8. [How your social circle shapes your success – The Real Estate Conversation](https://therealestateconversation.com.au/profiles/2023/12/15/how-your-social-circle-shapes-your-success/1702590388)
9. [The big questions for the housing market in 2024 – realestate.com.au](https://www.realestate.com.au/insights/the-big-questions-for-the-housing-market-in-2024/)