From 2022 to the present, the Australian property market has been caught in a game between two forces
Rising interest rates and insufficient housing supply.
In the end, the power of demand won out.
Over the past year, Australia's net overseas migration has reached 500,000, with increasing participation from overseas buyers, small home changers and cash buyers.
Demand has outweighed the drag from high interest rate inflation.
Expectations of a rate cut later this year have also boosted buyer confidence in early 2024.
This has greatly stimulated the property market in Sydney, Australia's largest and most prosperous city.
Sydney house prices have climbed to record levels as housing shortages continue to weigh on home buyers.
Sydney house prices have gone crazy!
Sydney's detached house and unit prices have risen for five consecutive quarters, a momentum almost never seen in Sydney.
Since bottoming out in December 2022, the median house price in Sydney has risen by 12.8%, or $185,000.
The median price of a single-family house in Sydney rose 2.1% to $1627625 in the first quarter of this year, which is also the first time that the median price of a single-family house in Sydney has crossed the $1.6 million mark.
Sydney is not building enough housing to make the current balance of supply and demand change in the short term.
The inability to meet housing demand has led to further increases in house prices.
The median price of a detached house rose in most areas of Sydney in the first quarter of this year.
Last year, the areas with the biggest increases in house prices were Central Coast and Parramatta, with increases of more than 10%, while Blacktown saw increases of just under 10%.
The median price of apartments rose 1.9% to $806137
Sydney's detached house prices are now more than double the price of apartments, and the spread has widened widen, suggesting that wealthy buyers are driving house prices higher.
Regionally, apartment prices in the downtown area have risen even more, with apartment prices in the East Side rising by an average of 11% a year.
The Inner Southwest, which stretches from Wolli Creek to Bankstown Airport, saw the highest increase in house prices, rising 7.6 per cent in the first quarter of this year and up 22 per cent compared to the first quarter of last year. The median home price rose to $1.55 million,
The highest increase in apartment prices was in Sydney's North Beach, which rose by 7.1 per cent in the first quarter of this year and 11 per cent compared to the first quarter of last year, with a median price of $1.2 million.
Reasons for the rise
The main driver of house price growth in Sydney is a chronic housing shortage.
Sydney has seen a record number of immigrants, and the vacancy rate in Sydney is also very low, and the supply of new homes has not kept up. The rental shortage has spilled over into the home market, overshadowing the impact of interest rate hikes
The lack of rental properties has flowed into the homebuyer market and has offset the impact of rising interest rates,
And the prospect of future rate cuts has spurred enough speculation to spur interest and drive buyer demand in the first quarter of 2024 as buyers try to get ahead of the competition.
Investors are seeing a lack of housing supply. They are active in the market, and these people have made strong capital gains and may be less sensitive to interest rates.
That is, they see future gains and thus tolerate high interest rates.
This is because the shortage of housing supply in Sydney is indicative of the current active group of buyers in the market, who may have previously achieved considerable asset appreciation and are relatively less sensitive to interest rates. ”
These buyers have ample cash reserves or savings on hand to buy a home, whether they are already in the market or first-time home buyers who are sponsored by their parents.
Before the rate cut, house price growth was slowing, but the increase in apartment prices was accelerating as more buyers began to pursue more affordable options.
The latest increase in Sydney house prices in recent times has been largely driven by buyers with plenty of money on hand.
A three-bedroom home at 89 Burwood Fitzroy St, Sydney's inner west, has just been sold for $2.75 million.
Incredibly, pictures of the house show that its roof has completely collapsed. The backyard of the house is overgrown with weeds and garbage is scattered all over the place.
Homes don't meet health and safety requirements, but even so, they're being robbed.
It can be seen that the market is hot.
rent
Aside from house prices, rents in Sydney are just as outrageous, with Sydney rents hitting record highs
Sydney's rental market is in crisis, with record vacancy rates, high rental prices, high demand and a growing population that has put the city's market in a pressurecooker environment.
In the first quarter of this year, the median asking price for a detached house in Sydney posted its biggest quarterly increase in 17 years
The median asking price of apartments has increased for the 11th consecutive quarter.
In the year to March, the asking rent for a typical detached home has risen by 13.6% (or $90 per week) and is now at $750 per week.
The median rent for apartments reached $700 over the same period, up 12.9 per cent, or $80 per week.
Strong demand has accelerated the growth of the Sydney rental market.
The escalating rent crisis is a major contributor to high inflation, cost-of-living pressures for households, and homelessness.
The strongest rental growth was in Sydney's inner south-west, where rents rose by 20.4 per cent, or $110 per week, to $650 per week.
This is followed by more remote and affordable areas, including the South West (up 19.6%), the Outer West and the Blue Mountains (up 19%), and Blacktown (up 18.4%).
With Sydney's population growing at more than 3% a year, a strong labour market and relatively good housing affordability have drawn interstate and overseas migration waves to Perth, laying a solid foundation for sustained double-digit house price growth in the near term
Here are some of the latest predictions:
ANZ predicts Sydney house prices could rise by 6-7% in 2024
· CBA predicts Sydney house prices could rise by 4% in 2024
· NAB predicts Sydney house prices could rise by 5% in 2024
· Westpac predicts Sydney house prices could rise by 6% in 2024
· SQM predicts Sydney house prices could fall by 4% in 2024
· PropTrack predicts Sydney house prices could rise by 5% in 2024
It's not 'out of the question' that Sydney house prices will rise by double digits this year, especially if the RBA cuts interest rates.
Do you think Sydney will rise in the future?
What do you think of Sydney house prices?