State of Sydney Report May 2024

As debate continues over the outlook for the Sydney property market, the latest edition of
the Shore Financial State of Sydney Report has revealed which suburbs, in a range of
price-points, are likely to outperform the market.

The quarterly Shore Financial State of Sydney Report divides Sydney’s 600-plus suburbs
into five quintiles, based on their current median asking price for houses:

The quintiles are:
● Quintile 1 = Heartland Sydney
● Quintile 2 = Suburban Sydney
● Quintile 3 = Rising Sydney
● Quintile 4 = Professional Sydney
● Quintile 5 = Affluent Sydney

Standout suburbs – Heartland Sydney (quintile 1)

Standout suburbs – Suburban Sydney (quintile 2)

Standout suburbs – Rising Sydney (quintile 3)

Standout suburbs – Professional Sydney (quintile 4)

Standout suburbs – Affluent Sydney (quintile 5)

Shore Financial CEO Theo Chambers said the research for the Shore Financial State of Sydney Report revealed the diverse nature of the current Sydney property market.

“Some suburbs are likely to experience strong price growth in the next six months, some are likely to stagnate and some are likely to go backwards, showing that Sydney is full of sub-markets that all have their own cycles,” he said.

“The last Shore Financial State of Sydney Report, three months ago, suggested that the more affordable Sydney suburbs were likely to experience the strongest price growth in 2024, and that’s still the case. But what’s changed since then is the interest rate outlook, which could have a major short-term and even medium-term impact on Sydney property prices.

“Earlier in the year, it seemed certain that the next move in the cash rate would be down, and that may still be the case given that the latest labour market data showed a rise in unemployment from 3.9% to 4.1% in April. However, the Reserve Bank is now signalling that it is thinking about increasing the cash rate, given that inflation is proving frustratingly sticky. The Reserve Bank will be paying close attention to the next quarterly inflation data, which will be released on July 31, and potential rate rises by the US Federal Reserve. Depending on how things pan out, an August cash rate increase is possible. Even one rate rise would drain some confidence from the market, which would affect buyer activity and price results.

“Property listings are another variable to watch. While listings in some suburbs have seen increases in 2024, overall 80% of Sydney still remains at very low levels of inventory, with conditions clearly favouring sellers. There’s no sign of this changing anytime soon – but if listings activity does prove more robust than expected in certain suburbs, that extra supply would put downward pressure on demand and impact local price growth over the next six months.

“Strong immigration is also contributing to stronger conditions across every price point. Again, there’s no sign of immigration levels declining meaningfully in the foreseeable future, but, if that did happen, it would dampen buyer demand.

“Forecasting is always tough as no one can see around corners – but it’s particularly challenging at the moment, given that we don’t have a clear view on interest rates and, globally, conditions are challenging. Ironically, global turmoil may actually be contributing to buyer activity, especially in Sydney’s premium suburbs, as Sydney property may be regarded as something of a safe haven. That’s a valuable reminder that both owner-occupiers and investors should approach property with a long-term mindset. History suggests that, in any given 10-year period, the Sydney market will experience ups and downs but ultimately have a significantly higher median price at the end of that decade than the start. There’s no reason to expect anything different from the next 10 years.”