By Leilani Shepherd

Supply and demand: why right now is the best time to sell in Sydney


Six months ago, Sydneysiders were staring down the barrel of a grim property market, with the fastest housing value drop on record reaching its low in February. CoreLogic reported that the value collapse reached 5.3%, barely a percentage point below the 6.4% loss recorded during the 2008 global financial crisis. 

The rapid decline that stretched across 2022 and into the new year was attributed by experts to almost a dozen consecutive interest rate rises, skyrocketing inflation and a host of other deteriorating economic conditions. As the gloomy summer selling season drew to a close, the decline started to lose steam, and despite fears around further cash rate increases and the proliferating cost of living, property values started rising again. 

Sydney is leading the charge, with a 1.3% increase in home values recorded over the March quarter. The Sydney Morning Herald reported some suburbs experiencing six-figure value jumps in three months, giving gravity to an already unprecedented rebound. Hurlstone Park and Earlwood were among the suburbs leading the recovery in Sydney, where values rose more than 12%, and Canterbury wasn’t far behind with an 11% increase recorded. Sydney property values grew another 1.8% during May, bringing the total value increase to 4.5% over a period of just three months. 

So what’s driving such an intense rebound? A lot of factors are contributing to the uptick but essentially, it can be put down to supply and demand. Nationally, listing volumes were tracking 31.5% below the decade average in May, while skyrocketing rental prices and stamp duty reforms for first-home-buyers continue to drive younger demographics out of the rental scene and into an already disproportionately large pool of buyers. Post-covid migration also plays a generous part, with new investors breaking into the Sydney market every day after years of border restrictions containing overseas buyers. 

With values rising at an unprecedented rate, suburb records are being broken for houses and apartments alike and experts warn that continued growth at this pace could see the market peak in the next six months. As of March, Sydney housing values were still up 7.7% compared to the same time in 2020 and with this number increasing monthly, Sydney has entered the best selling period since the 2021 peak, according to Domain

Sellers are, however, constrained by time. CoreLogic predicts that the current rate of value growth is unsustainable, with housing affordability measures becoming increasingly stretched. Interest rate hikes have no definitive end in sight and the abolition of stamp duty relief introduced for first-home-buyers by the previous NSW state government is set to end July 1st. The reduced borrowing capacity of buyers prompted by interest rate hikes is likely to discourage a significant cohort from purchasing and coupled with a legion of mortgagees facing an end to the fixed-interest period on their loans, the supply and demand that has been driving higher prices over the last quarter is expected to come to an end. CBA confirmed that 26% of its fixed-rate loan holders will roll off their fixed terms post-June 2023, which is likely to push another wave of properties into the market, further reducing competition.

In an article released June 18, journalists from the Sydney Morning Herald assert that Sydney buyers are facing the strongest market since the 2021 boom, with auction competition and property pricing reaching a new peak. Clearance rates have risen to their highest point in eighteen months, the average rate recorded for the month of May exceeding 75% in the Inner West and Inner City regions. CoreLogic Australia head of research Eliza Owen warns that the break in rate rises in January and April might have bolstered buyer confidence and hastened the recovery, but with rate hikes resuming over the last two consecutive months and the potential for more to come, price growth is set to slow down significantly and we could soon see the scales tipping in the other direction.

With price growth expected to level out and housing turnover set to increase, the heated selling conditions Sydneysiders are currently experiencing will likely taper off as we enter the second half of the year. For owners considering selling up, the market suggests to get a move on. Starting the process sooner rather than later will afford you the opportunity to achieve top results while the market is still hot.