How The Sydney Market Has Changed Over 25 Years

December 2nd, 2022 - by Brad Gillespie

It’s now 25 years since I started working as a real estate agent in Sydney’s Inner City and Inner West.

A lot has changed over that time, but a lot has also stayed the same. Here are six lessons I’ve learned over the past quarter century.

1. Ups and downs don’t last forever

When it comes to the property market, many people get caught up in the here and now and fail to notice the bigger picture. As property prices started roaring ahead in 2020 and 2021, a fear of missing out gripped the market with many buyers being prepared to pay whatever it took to get a foot on - or up the ladder. Right now, the reverse is often true, with a lot of buyers and sellers fearful that prices will keep dropping.

But at some stage the market will turn - and when it does, history shows it’s likely to turn suddenly and sharply.

Research from Domain reveals the average downturn in the Australian property market lasts only nine months and prices fall around 3%, while the average boom lasts more than 33 months and prices rise 32.7%. Remember, that’s an Australian average - here in Sydney the rises often happen faster (and the falls can be steeper too.) In the Inner City and Inner West I’ve often seen the market rebound rapidly. So if you’re one of those buyers holding off, by the time you get around to acting it could be too late.

2. Interest rates don’t keep going up either

The RBA has raised interest rates seven times in seven consecutive months, and it can feel like the pain will never stop. But again, the RBA will stop raising rates, and when it does confidence is likely to return to the marketplace.

The last time rates rose this quickly was back in the mid-1990s. Then, the RBA got worried about how much people were borrowing and how quickly prices were rising. So in just five months, they took the official cash rate from 4.65% to 7.5% (this makes today’s 2.65% official cash rate look very low in comparison).

The market responded with a minor correction, then it stabilised, and then it took off massively again. It was the beginning of Sydney’s longest-ever property boom, which went almost uninterrupted from 1996 to 2008. During this time, the RBA cut the official rate many times, and they have never been as high as 7.5% since (although they almost got there in 2008).

This time around, rising interest rate rises have had more impact because people have more debt - the median new mortgage in NSW is now over $730,000, compared with around $100,000 in the mid-1990s.

3. Fashions change, even with suburbs

When I started working in the 1990s, the Inner West and Inner City were very different places. They were still great areas, but they were very much more up-and-coming than they are now.

Our area changed a lot in the 1990s and 2000s as people started leaving the suburbs and moving to more urban areas. There was renewed interest in walkability as people wanted to be where the action was rather than travelling to it and then returning home again. As a result, we saw more families moving into our area, as well as young professionals and downsizers, and more cafes and restaurants and shops came in too.

We knew the area was changing fast when in 2001, I made Alexandria’s first-ever million-dollar sale: a freestanding home that went for $1,220,000. That seems like a bargain today, but it was an incredible amount of money at the time for a suburb that people often overlooked.

4. Infrastructure can change an area

Our area didn’t just become popular because of its proximity to the city; it also started getting much better infrastructure. For instance, in 1997 the light rail opened - although it only went as far as Wentworth Park at first. In 2000 it was extended to Lilyfield; and in 2014 to Dulwich Hill.

In 2000, Green Square station was opened. At first, commuters had to pay a premium just to use the station because it is on the Sydney Airport line. But that changed in 2011, which helped encourage the area to transition from an industrial heartland to a residential one.

And the Sydney Metro Waterloo line is about to open - changing our area again.

5. Forecasting the future is impossible

Over the past 25 years, we’ve heard so many predictions about Sydney’s property market - and our local market. And, I have to say, it’s amazing how few of them have come true.

Remember when the pandemic first struck in 2020, and we were told property prices could drop 30%, but they ended up rising 30% instead? The same thing happened when the GFC hit, and people feared the worst. But 2009 and 2010 ended up being good years for Sydney property too.

The reality is that no one can forecast the property market with any certainty. However, the long-term trend for Sydney property is almost always for its value to rise. So rather than waiting to time the market, it’s better to buy and sell at a time that suits you and your lifestyle.

6. Good property always sells

Despite the many ups and downs, the interest rate changes, the changing fashions and the changes to demographics, the one constant has always been that good property will sell. It’s true that in a hot market it will usually sell more quickly - and potentially for more money. But if you’re buying as well as selling, you’re better off doing it in the same market rather than hoping for it to turn.

Want more?

Contact our team today to find out more about how we can help you buy and sell in Sydney’s inner city and inner west.