According to economists, Sydney’s property prices are expected to increase following the Reserve Bank of Australia’s (RBA) decision to keep interest rates on hold after ten consecutive hikes. Although this move is temporary, with the RBA suggesting that further increases may be necessary to maintain inflation at 2-3% over time. The decision followed a recent report by CoreLogic, which revealed a 0.6% rise in national dwelling prices in March, the first increase since April 2022, with Sydney leading the way with a 1.4% gain, bringing the city’s median property price above $1 million once again.
CoreLogic’s research director, Tim Lawless, has suggested that the RBA’s rate pause would inspire confidence in the housing market, causing property prices to continue rising. He noted that the flow-on effect from this decision would be immediate, with potential buyers becoming more active in the marketplace. Mr Lawless stated that it would be good conditions to sell, but sellers are not currently selling, as the number of new listings in Sydney is down 25% compared to last year and approximately 12% below the five-year average, according to CoreLogic data.
Dr Luke Hartigan, a former RBA economist and a lecturer at the University of Sydney, believes that one interest rate pause will not significantly impact Sydney’s property market. He suggested that buyers and sellers may also pause to see what happens, with their expectations of prices determining their actions. If they think prices will fall again, they will remove their property from the market, pushing supply down and prices up. However, if the RBA leaves interest rates on hold during its next meeting, it may create more confidence in the market.
Increased overseas migration to Sydney, along with a tight rental market, has also contributed to the current demand for property. However, a lack of supply has created challenges for buyers, such as Maroubra renter Jane Hamilton, who is seeking her first home with her partner. Ms Hamilton notes that the current lack of stock means they must look further afield, despite having the option to buy. While the new state government’s stamp duty plan is intended to assist first homebuyers, Ms Hamilton, who is spending over $1 million on her first home, feels that the plan will not benefit her.