23/24 End Of Financial Year Property Market Update Sydney City & Pyrmont

In the latter part of 2023, the market presented an exceptional opportunity for discerning and well-capitalised buyers to invest in apartments, with economists predicting a forthcoming shortfall of units in Sydney and Melbourne. Attractive purchasing prospects abounded in the Sydney City and inner-city apartment markets, with high-calibre properties available that would have been quickly secured in previous years. Downsizers were reluctant to sell due to negative sentiment and lack of urgency, while escalating costs, interest rates, and inflation prompted vendors to divest surplus investment holdings, increasing buyer choice. This resulted in fewer buyers entering the apartment market, traditionally dominated by downsizers and investors.

By February, the year had started strongly, with high attendance from buyers and tenants at open houses. Buyers were eager to enter the market before anticipated interest rate reductions and price increases, which were predicted by mid-year, yet these changes have yet to materialise. On the rental side, availability remained scarce, with strong demand from international tenants, particularly near universities and schools.

By mid-year, the inner-city rental market had evolved, with rental prices softening quickly due to increased supply and lower demand despite low vacancy rates indicating persistent housing demand. CoreLogic data stated some areas of Sydney had record-high rents, although this varied widely across the various LGAs. Rising living costs pushed tenants to more affordable suburbs, increasing the average number of days properties remained on the market in the inner city. Rental applicants were applying for multiple properties at once due to perceived competition, influenced by media narratives. Executive tenants who owned property were also impacted by interest rates, reducing their disposable income and interest in premium rentals as a result.

Predictions for the future

As it stands, the Sydney CBD, Pyrmont, and inner-city markets are still largely driven by rising living costs, uncertainty around interest rates, and inflation. The hope of an interest rate drop by the end of 2024 acts as both a deterrent and attractor, with savvy buyers recognising an opportunity to buy well in a less competitive market and conservatives holding back due to uncertainty about rising costs.
A recent CoreLogic report* identifies that 87% of properties sold in the March 2024 quarter in the City of Sydney LGA made a gross profit, with the median profit being $287,500 and the median hold period being 10.9 years. For comparison, 91.6% of properties throughout Sydney made a gross profit, with a decade average of 95.2%. In June, Sydney home values hit a record high, increasing by 1.2% in the three months to May, displaying 6.3% growth in value over the 23/24 FY. Nationally, profit-making sales have risen to their highest level since July 2010, increasing to 94.3% with a median gain of $265,000.

High-quality properties continue to transact well despite the market softening somewhat since 2023, as demand for quality properties remains reasonable. While confidence is lower compared to this time last year, this is expected to be temporary. In the prestige apartment market segment, most transactions are occurring at fair and reasonable levels given current conditions. Although there aren't numerous sales, the momentum remains steady.
We anticipate the market will begin to rally within the next six months or so. Buyers currently hesitant will likely face increased competition and higher prices soon. In 12-24 months, most properties bought now will likely be seen as a good purchase when considering Sydney's historical market trends. Therefore, we encourage buyers to move beyond seeking bargains and focus on securing properties that meet their needs—acting before the market trend moves upwards and the herd mentality returns will be advantageous.

As of the end of this financial year, Sydney's unit market has recorded the most significant drop in annual rental growth over the past financial year, reducing by 10 percentage points to 7.1%*. This is due to Sydney having the most exposure to overseas migration, which has slowed sharply since moving through record highs last year. With net overseas migration continuing to normalise and affordability continuing to be an issue for renters, we could see a further easing in rent growth in the inner-city apartment market. Now is a crucial time for a landlord to have an excellent property management team to partner with. From adjusting pricing strategies to tailoring marketing approaches, the expertise of a skilled agent can make all the difference in optimising rental income and minimising vacancy periods.

*CoreLogic Pain & Gain Report June 2024 (Data for March 2024 Quarter), Corelogic June Home Value Index as of 30 June 2024.

Ayre Real Estate 23/24 FY Results

We've helped nearly 1,500 people reach their property goals this financial year!

Sales Highlights

86 - Number of Sales

$196,226,237 - Total Sales Volume

$2,281,700 - Average Sale Price

60 - Average days on market

6908 – Buyer Enquiries

1821 – Buyer Appointments

2,563 – Buyers Met

Top 3 Sales

• 1501/71 Macquarie Street, Sydney – Confidential
• 1503/61 Macquarie Street, Sydney - $10,000,000
• 3401/68 Market Street, Sydney - $8,000,000

Property Management Highlights

$1.4 billion - Total Asset Value

281 – Properties Leased

$4,668pm – Average Monthly Rent

7,775 – Tenant Enquiries

1282 - Tenant Appointments

Top 3 Rentals

• 71 Macquarie Street, Sydney - $3,995 per week
• 18 College Street, Darlinghurst - $3,000 per week
• 88 Barangaroo Avenue, Barangaroo - $3,000 per week off market

We are for apartments.

If you are considering buying, selling, leasing or property management in Barangaroo, Sydney City, Millers Point, Circular Quay, Pyrmont or surrounds, we would love to help you. Ayre Real Estate specialises in apartment living and ready to help find your ideal property. Talk with us today to find out more.