Market Wrap: December 2022

December 15th, 2022 - by Brad Gillespie

Read any media report and you’d know that Sydney’s 2022 property market was very different from 2021’s.

Gone was the intense competition, record auction clearance rates, fear of missing out and double-digit growth. In its place was a market where confidence was dwindling, competition was evaporating, and prices were falling.

But while it’s true that Sydney’s median property value fell -10.6% in the year to 30 November, according to CoreLogic, that really doesn’t tell the full story of how the property market has been performing.

Demand remains relatively strong in inner city and inner west

Here in the inner city and inner west, we’ve noticed that demand has stayed relatively strong. Even now, in late 2022, it is not unusual to show up to 30 groups through a property on a Saturday open home. We’re also seeing strong auction clearance rates, with the inner west registering an official clearance rate of just over 70% (usually a sign of a seller’s market).

Anecdotally, we’ve noticed that the clearance rate in suburbs such as Alexandria and Erskineville is often as high as 90% on some weekends.

One of the key reasons for this is that there aren’t a lot of auctions happening right now. We haven’t seen the usual rush of Spring properties come onto the market in our local area. This is driving up competition for those properties that have been listed.

Suburbs defying the Sydney property market

Given that property prices are always set by the laws of supply and demand, fewer listings also mean that prices here haven’t fallen in the same way they have across Sydney.

So, despite broadly weakened market conditions, where some areas saw 20% falls, there were many rays of sunshine in the market.

The table below shows some of those suburbs and property types that have defied Sydney’s property downturn to register gains over the past year.

Suburb Property type Median Value Growth 2022
Alexandria Two-bedroom house $1.48 million 4.7%
Alexandria Three-bedroom house $2.05 million 7.9%
Alexandria Two-bedroom apartment $995,000 6.5%
Alexandria Three-bedroom apartment $1.515 million 8.2%
Erskineville Three-bedroom house $1.901 million 3.1%
Erskineville Two-bedroom apartment $1.065 million 6.7%
Marrickville Two-bedroom house $1.65 million 15.8%
Marrickville Three-bedroom house $1.92 million 14.3%
Rosebery Three-bedroom house $2.093 million 14.1%
Rosebery Three-bedroom house $1.285 million 7.1%
Zetland Two-bedroom apartment $985,000 4.5%
Zetland Three-bedroom apartment $1.638 million 7.8%

* Source: Domain Suburb Profiles, Dec 2022

What to expect heading into 2023

There’s little doubt that the main cause of Sydney-wide property slowdown is rising interest rates. The RBA has lifted the official cash rate every month for the past eight months now, taking it from 0.1% to 3.1%. This is impacting both how much buyers can borrow and how much they can afford.

It is also creating a level of uncertainty among would-be sellers - hence the reduced number of listings.

We expect that when the RBA stops raising the official rate, a level of certainty will return to the market. The cost of renting has never been higher, and vacancy rates are nearing record lows, so strong yields should attract investors into the market and encourage first-home buyers to purchase their first home.

In the meantime, we’re seeing especially strong activity in the market for larger apartments and houses, as the table above shows. This is being driven by two important buyer sectors.

The first is upsizers, who understand that a flatter market like the current one is usually a much better time to make a move up the ladder than a runaway market like 2021’s. On the other end of the spectrum, we’re seeing more downsizers move into our area. Many of these have recently sold their family home in the suburbs and want to be closer to the action.

Downsizers often put a premium on space, as well as on luxury - so we’re often seeing top-end properties move faster than the rest of the market.

Finally…

While 2022 may not have resembled 2021, it has still been a relatively strong year for many segments of the property market here in the inner city and inner west.

It always pays to remember that the long-term trend for Sydney property is upwards. So it’s best to look past any short-term uncertainty and make your next move at a time that suits you rather than trying to time the market.

Want more?

If you are looking to buy or sell in Alexandria or Erskineville, contact my team today.