Sydney’s buoyant property market leads Australia’s real estate recovery

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Sydney continues to lead what is being called a "recovery trend" in the property market, posting a 1.8% lift in home values in May, according to Corelogic’s latest data.

This number has been highlighted because it's the city’s highest monthly gain since September 2021. Since a low point in January, home values have actually risen by 4.8%, or the equivalent of a $48,390 lift in the median dwelling value, says Corelogic.

This is promising for home owners and sellers, and indeed the broader real estate industry. It's not really welcome news for would-be first homebuyers, however, who have surely been worried about rising home loan interest rates as well.

For broader context, other capital cities have experienced similar growth of late. For example, Brisbane (up 1.4%) and Perth (up 1.3%) are the other capitals to record a monthly gain of more than 1%.

The trend in regional housing values has also picked up, with the combined regional index rising half a percent in April, following a 0.2% and 0.1% rise in March and April.

Fewer homes on offer, more homebuyers

The age-old equation of demand versus supply appears to be the key factor in rising home values. 

CoreLogic’s research director, Tim Lawless says the positive trend is a symptom of persistently low levels of available housing supply against rising housing demand.

“Advertised listings trended lower through May with roughly 1,800 fewer capital city homes advertised for sale relative to the end of April,” he said. “Inventory levels are 15% lower than they were at the same time last year and 24% below the previous five-year average for this time of year.

“With such a short supply of available housing stock, buyers are becoming more competitive and there’s an element of FOMO (fear of missing out) creeping into the market. Amid increased competition, auction clearance rates have trended higher, holding at 70% or above over the past three weeks. For private treaty sales, homes are selling faster and with less vendor discounting.”

Premium property ahead of the pack

Still, younger and first time buyers should take heart that it really is the upper end of the market that has led to a rise in values, especially in Sydney. 

In fact, Sydney’s upper quartile (the most expensive quarter) stands out with the highest rate of growth, gaining 5.6% over the past three months compared with a 2.6% rise in more affordable lower quartile values.

This distinction is important to make because quite often real estate headlines sway general buying appetite. And yet, not all markets are the same. In fact, demand in one suburb might not equate to the number of people on the hunt two suburbs over. Furthermore, asking prices and therefore the amount a person needs to borrow for a home loan can change depending on the time of year. 

So getting a longer view of price movements and certainly where the buying crowd is circling can help you make more informed decisions about when to pounce. Remember, a general rise in property values isn’t always representative of a given area or a property type. 

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