Real Estate Market Wrap-Up 2024 and Predictions for 2025

As we close the chapter on 2024, the Sydney real estate market has proven to be both resilient and dynamic. This year has been a mixed bag for property owners, buyers, and renters, marked by fluctuating demand, changing rental conditions, and a cautious optimism for the future. Here’s a look back at the year that was and what’s expected in 2025.

2024 in Review

A Year of High Supply and Cautious Demand

Spring 2024 saw record-breaking levels of new listings, the highest since March 2019, offering buyers a rare abundance of choice. This supply surge was accompanied by softer buyer demand, with many waiting for anticipated cash rate cuts to improve borrowing capacity. Despite the favourable conditions for buyers, clearance rates dipped to their lowest point of the year, particularly in Sydney’s inner-city areas, reflecting a market driven by negotiations rather than competitive bidding wars.

Shifts in Selling Dynamics

Sellers faced longer days on market and increasing pressure to adjust pricing expectations. Price alignment and strategic sales approaches became paramount, emphasising the importance of trusted agents, well-timed campaigns, and excellent property presentation.

Resilient Apartment Market in November
November was a particularly resilient month, with our office transacting over $23.5 million in property sales. This uptick reflected renewed interest from ex-pats and local downsizers following the Spring selling season, as buyers began their property search in anticipation of a market recovery in 2025.

Rental Market Stabilisation
The rental market in 2024 evolved steadily, with house rents reaching a record $775 per week (a 2% increase) and unit rents stabilising at $720 per week Sydney wide, marking the September quarter the first steady one of the year. Although annual rental growth slowed to 5.9% (down from last year’s 23.6%), demand remained robust, especially from international tenants and those seeking housing near universities or city hubs. Vacancy rates rose to 1.1%, the highest since 2022, providing slight relief for tenants.

Market Activity Throughout the Year

• Early 2024:
  The year began strongly, with solid buyer and tenant interest, especially from those eager to enter the market before interest rate adjustments.
• Mid-Year Trends:
  By July, the market reflected an equilibrium between supply and demand, with both buyers and tenants encouraged to act promptly to avoid seasonal increases in competition.
• Spring Surge:
  While the surge in new listings during Spring created opportunities, it also highlighted the need for realistic pricing and strong sales strategies in a buyer-driven market.

Predictions for 2025

The outlook for 2025 is cautiously optimistic, with key indicators suggesting a gradual market recovery:

1. Improving Apartment Market:
   By the end of the financial year, the apartment market is expected to show stronger signs of recovery, buoyed by stabilising interest rates and renewed buyer confidence.
2. Auction Clearance Rates on the Rise:
   Clearance rates, which softened to 60% in 2024, are forecast to climb to 70%-75% by mid-2025, reflecting growing buyer activity and competitive bidding.
3. Metro Housing Leads the Way:
   Metropolitan housing stock will recover first, with city and city-fringe apartments following suit. By spring 2025, days on market are projected to drop substantially, heralding a more balanced market.
4. Stock Levels to Increase:
   As interest rates ease, more sellers are expected to enter the market. Stock levels are likely to rise by mid-year and stabilise by the third quarter, offering buyers greater choice and reducing pressure on pricing.
5. Rental Market Stability:
   Rent growth is predicted to remain moderate, with vacancy rates continuing to improve. This should ease some pressure on tenants while maintaining solid yields for investors.

Key Takeaways for Buyers, Sellers, and Investors

For buyers, the first half of 2025 presents an excellent opportunity to secure properties before the market fully rebounds. Sellers should focus on strategic pricing, presentation, and timing to maximise outcomes in a still-recovering market. Investors can look forward to steady rental yields as demand remains robust.

2025 promises to be a year of renewal for the Sydney real estate market. As the landscape evolves, staying informed and agile will be key to navigating opportunities and challenges alike. Reach out to the Ayre Real Estate team to discuss how we can help you achieve your property goals in the year ahead.