In Sydney’s busiest period for real estate transactions, we witnessed the first price decline in almost two years while Adrian William achieved its strongest quarter on record.
The December quarter has been Adrian William’s strongest selling season yet, with consecutive record months for number of sales and number of listings across October and November. The momentum driving the quarter begun in September, as Sydney geared up for the annual influx of stock that always presents itself in the lead up to the holidays, and continued to grow as we moved deeper into spring and summer.
A rise in stock levels between October and mid-November made for some of the best buying conditions we’ve seen in the last two years, granting the freedom of choice to buyers in a market facing saturation across both entry-level and more advanced markets. By late November, we noticed that new stock was beginning to dry up, and this was cemented by December 1st when a level of scarcity re-entered the market and plunged purchasers back into a far smaller pool of buying options. While demand softened substantially at the beginning of December, it continued to outweigh supply, forcing buyers who initially dismissed homes at first glance in October and November to reconsider in order to secure a property in 2024.
Stabilisation appears to be on the horizon, even as the annual cool-down that characterises Sydney’s late-December market moves into full swing. CoreLogic reporting revealed a 0.6% decline in Sydney dwelling values over December, making for a 1.4% drop across the quarter – a figure that accounts for more substantial drops in house values compared to apartments. Despite city-wide figures showing a sharper correction than anticipated, this is not necessarily a reflection of conditions across the Inner City and Inner West; Adrian William have seen values remain relatively steadfast in our marketplace and anticipate that they will remain stable as 2025 commences. There’s optimism in the air as the new year approaches, and looking forward, we anticipate a strong start to 2025. With almost sixty properties set to go to market so far, the dip in supply that’s restricted buyers in recent weeks is expected to rebound early in the quarter. We feel that vendors who are quick to list in the new year will have the benefit of less competition, as stock levels generally return to normal at the beginning of February. There is no question that buyer sentiment will ramp up again in January, and sellers that get in before the end of school holidays will reap the rewards of a renewed market.
The words on everyone’s lips continue to be ‘interest rates,’ and all eyes will be on the first RBA meeting in the new year, set for February 18th. With most economists not predicting rate cuts until the second half of 2025, there remains a quiet hope from buyers and homeowners alike that this news might come earlier, which has the potential to impact the trajectory of a stabilising market. A single rate cut, when it comes, may not create a lot of impact on borrowing capacities, but it certainly has the potential to renew hope and energy in a buyer pool facing the pressures of elevated interest rates and reduced borrowing capacity.
A quiet hope looms on the horizon, as buyers and vendors prepare for a strong start to 2025 and scarcity takes its leave. Recovering from months of increased activity, both in listing volume and buyer demand, we expect the strong results of the December quarter to resume in late January, as investors planning for the year ahead cash in, first-home-buyers dip their toes into the market, and families follow through with plans to upsize or downsize. Ready-to-go buyers may experience a window of advantage in the first half of 2025, as slowing price growth, which started to even out in mid-2024 and has continued to correct in the months since, paired with an influx of new stock, creates choice and stability.
If the highly anticipated rate cuts do, in fact, come into effect later in the new year, buyer demand will again be stimulated, and we may see another spike in values, though speculation from Sydney economists suggests the market has already passed its peak in this cycle.
Demand for Inner City locales is unlikely to waver, and we anticipate stability in value across areas within 5km of the CBD, which remain popular with all buyer demographics. Up-and-coming suburbs like Summer Hill, Lewisham and Dulwich Hill are likely to experience stronger demand in the new year, as buyers facing rate pressures and restrictions on borrowing capacity are priced out of Marrickville, Newtown, Leichhardt and the Balmain peninsula. Suburbs on the Inner West’s fringe, like Hurlstone Park and Earlwood, are already seeing interest from Inner City buyers not previously looking to invest in the region.
The December quarter has been stronger than anticipated, and the stability of home values this quarter is a testament to the desirability of the region. Well-connected, diverse and community-centric, the Inner City and Inner West continues to attract buyers of all demographics.