May 2023: Property Market Quarterly Wrap Up

May 5th, 2023 - by Brad Gillespie

2022 was a disappointing year for our local property market, with Sydney’s citywide median falling -13.8% between January 2022 and January 2023.

However, for the past three months, we’ve been seeing prices rebound.

Sydney’s median dwelling value lifted 3.0% over the quarter to 30 April, according to CoreLogic’s latest data. This included a 3.2% gain in the median house value and a 2.3% gain in the media apartment value. That means the median Sydney value is still -10.7% down from where it was a year ago but 13.8% higher than it was pre-pandemic.

The strength of the current market is also reflected in our caution clearance rates, which Domain reports have been hovering at - or even over - 70% for the past six weeks. The auction clearance rate can often be a reliable indicator of where prices are headed, with the 60%-70% band indicative of a ‘neutral’ market.

That means anything over 70% generally means prices are rising; anything under 60% indicates prices are falling.

Inner city and inner west performing strongly

Our area has been outperforming the wider average, with the inner west recording an auction clearance rate of 76.5% for the weekend of 29 April.

Price-wise, our area is also holding up better than many others, with releasing the following data about some key inner-west and inner-city suburbs.

Suburb Median house price Median apartment price
Alexandria $1,654,500 $880,000
Erskineville $1,601,500 $900,000
Redfern $1,560,000 $953,5000
Marrickville $1,767,000 $725,000
Dilwich Hill $1,870,000 $797,500
Waterloo $1,520,000 $890,000
Newton $1,650,000 $715,000
Chippendale $1,460,000 $725,000
Camperdown $1,655,000 $815,000

Have interest rates given way to other influences?

There’s little doubt interest rates have been the main influence on our property market over the last year and a bit. Between May 2022 and March 2023, the RBA lifted the official cash rate every month, taking it from 0.1% to 3.6%

In April 2023, the RBA paused for the first time since beginning to raise rates and this had an immediate effect on the market. We noticed that a lot of people started to become more confident about buying and selling. As a result, we expect to see more transactions this winter and spring than we have been seeing over the past year.

The interesting thing, however, is that Sydney’s median value actually started rising well before the RBA’s rate pause. This suggests there are other factors at play too.

One factor that we’ve noticed beginning to play on buyer’s minds is the strength of the rental market (see below). This is encouraging investors into the market and prompting many tenants to consider buying for the first time.

But an even bigger issue - and one that’s driving rental prices higher - is that, with borders reopen and migrants returning, there is a chronic housing shortage in our area. There is not enough supply to meet the growing demand for properties in our area, both in the sales and rental market. Having major employers like a large hospital and universities on our doorstep only add to appeal, and pressure on the housing market. That should ensure that, over the longer term, we’re likely to see price rises, even if we don’t see a return to the kind of accelerated growth we saw in 2021.

Just how strong is the rental market in our area?

SQM Research shows that the median weekly rent in Sydney’s inner west has risen 34.4% over the past 12 months, going from $560 to $759. The median apartment rent has grown even more dramatically, lifting 39.6% to now stand at $670.

Again, this reflects the dire shortage of local housing options in our areas, especially in the face of a growing population. When someone moves here they generally rent first, even if they later buy.

This is bad news for renters, who find that they often have to compete hard for somewhere to live, or settle for second best. For investors, this means inner west property is returning its highest yield in a long time, with the median yield for apartments now over 4% in many parts of the inner city and inner west.

Want more?

Today’s market is a very different one from even a couple of months ago, with buyers returning and prices rising. It is certainly no longer all doom and gloom as some news headlines would have you believe. So, if you’re thinking of buying or selling and moving onto your next home, my advice is to get in now before we potentially experience more price rises.

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.