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Sydney Property Market Outlook For 2025

What’s in store for Sydney’s property market this year?

With interest rate cuts anticipated in 2025, the market could see significant shifts after 2024’s steady growth. Whether you’re a first home buyer or a seasoned investor, understanding the trends ahead can help you make an informed decision.

Interest rate cut predictions

The Reserve Bank of Australia (RBA) is expected to cut rates in 2025. The question is, when? The RBA’s own forecasts predict a 25 basis point drop by June 2025, but the bank has cautioned that underlying inflation remains too high, underpinned by persistently high services price inflation. As a result, the central bank has stuck to the line that the outlook for inflation and the overall economy remains highly uncertain

Three of the big four banks (ANZ, NAB and Westpac) expect the first rate cut to follow the RBA’s May meeting. The Commonwealth Bank stands apart, forecasting an earlier start to the cycle, with a reduction as soon as February.

How could rate cuts affect Sydney property prices?

Interest rate cuts often have a significant impact on property markets, particularly in supply-constrained cities like Sydney. Lower rates increase borrowing capacity, which, in turn, typically spurs buyer activity. With Sydney’s market already constrained by limited housing stock, this dynamic often leads to higher property prices.

However, recent data from SQM Research paints a more nuanced picture. In November 2024, Sydney property listings surged by 17.6% year-on-year. While seasonal factors caused a dip in December, total listings were still 4.4% higher than in December 2023.

More properties on the market could provide buyers with increased choice once rates are cut. This might lead to a more balanced market, with gradual price rises rather than sharp spikes.

 

 

 

Predictions for Sydney property prices

What do the experts expect for Sydney’s property market this year?

  • Domain: Forecasts a 4-6% price increase for both houses and units in 2025, driven by easing financial conditions and tight market supply. However, stretched affordability may temper growth compared to 2024.
  • PropTrack: Projects more modest growth of 1-4%, balancing increased listings with heightened buyer activity.

In December 2024, Sydney’s median house value stood at $1,443,000, while units were at $816,000, according to PropTrack. If growth reaches the higher end of predictions, house prices could climb to $1,500,720, and unit prices could rise to $848,640.

Buy now or wait?

The decision to buy now or wait until after interest rates are cut depends on your circumstances, risk tolerance, and financial goals. Here’s a breakdown of the potential pros and cons:

Pros of buying now: Buyers who act now may avoid the increased competition expected to come as a result of increased borrowing capacity after a rate cut. This means you could secure your purchase at current market prices before the potential increase.

Cons of buying now: Interest rates are higher, which could limit your borrowing capacity and increase your monthly mortgage repayments in the short term.

Pros of waiting: Lower borrowing costs after a rate cut could allow you to stretch your budget and secure a higher-value property.

Cons of waiting: Delaying could expose you to increased competition and potentially higher property prices, thereby negating the benefits of lower rates.

Ultimately, the best time to buy is when you are financially ready. Whether you act now or later, remember that property is a long-term investment that historically appreciates over time.

Looking to buy a Sydney property in 2025? Shore Financial can help. To discuss your scenario, call us on 1300 416 700, email us on info@shorefinancial.com.au or fill in this online form.

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