PHOTO: Sydney Opera House. FILE
Sydney‘s median house price has surpassed the formidable $1.6 million mark, but recent research indicates a deceleration in the rate of growth. Conducted by property industry analyst and economic forecaster Oxford Economics Australia, the study brings unwelcome news for potential first-home buyers in Sydney. The city witnessed a 10.3 percent increase in its median house price last year, exceeding the previous peak recorded in December.
However, the real estate landscape in Sydney may encounter turbulence in the current year and beyond, attributed to elevated interest rates and declining clearance rates, as highlighted by Oxford Economics Australia. Factors such as the Reserve Bank of Australia’s decision to raise the cash rate to 4.35 percent in November, an upswing in current listings, and softening auction clearance rates contribute to this outlook. Despite these challenges, there is anticipation of interest rate cuts later in the year, likely fueling additional growth in house prices.
Oxford Economics Australia’s senior economist, Maree Kilray, foresees, “The return of interest rate cuts will drive the next acceleration of price growth from late 2024.” The forecast predicts a 5.9 percent increase in Sydney’s median house price over the two years leading to June 2026, with median unit prices expected to surge by 8.3 percent during the same period. The median price, representing the sale price of the middle home in a list of properties ranked by sale price, forms the basis of these projections.
Sydney’s median house price has reached more than $1.6 million, according to new research. (Getty Images/iStockphoto)
The research also notes that the federal government’s decision to raise fees on foreign investors who acquire Australian property but keep it vacant will be confined to specific Sydney suburbs. On a national scale, Oxford Economics Australia reports that the country’s median house price reached a new high of $939,000 in December. However, growth is anticipated to slow this year, with national clearance rates projected to drop from 70 percent to 60 percent, and monthly price growth stabilizing.
Maree Kilray remarks, “Capital city performances have diverged in recent months,” pointing out that total listings have increased in Melbourne and Sydney, a trend expected to persist in the coming quarters, acting as a deterrent to price growth.
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