The competitiveness for sought-after, high-quality homes across Sydney’s key lifestyle markets was once again illustrated in May, with BresicWhitney data revealing the group’s auction clearance rate held steady at 86%, despite a dip in the city’s preliminary auction clearance rate to around 71.1%.

BresicWhitney transacted on 116 sales in May 2024, an increase on the 100 sales in April, with the group’s CEO Thomas McGlynn citing strong offers and confident bidding as hallmarks of the month, and reflective of the prevalence of buyers with little to no mortgage that are active in the market. 

 

This resilience, concentrated within Sydney suburbs in a 10-kilometre radius of the CBD, comes despite reduced borrowing power, affordability constraints, interest rate uncertainty, and cost of living pressures that are affecting buyers and sellers more broadly. 

BresicWhitney has sold 460 homes in the year-to-date compared to 391 for the same period in 2023. There have been 594 homes listed in the first five months of 2024, compared to 497 for the same period in 2023. 

 

 

Key areas that remain tightly held and are generating standout sales results are evident across the Inner West, to Inner East, to Lower North Shore, according to BresicWhitney. This was exemplified with the buoyant auction of 71 Burren Street, Newtown, which sold under the hammer for $3,845,000. An existing Inner West buyer, who had been house-hunting for two years, outbid six other parties for the renovated four-bedroom home, in front of 150 onlookers, to push the sale price well past its reserve. Mr. McGlynn said, “There remains a distinct shortage of three- and four-bedroom homes across Sydney’s main lifestyle pockets. What certain market activity continues to demonstrate is that there are buyers who will extend past the perceived value of these homes to secure them, if the opportunity is right.”

“Despite the macroeconomic factors influencing buyer activity more broadly, we continue to see this as a driving factor in recent auction intensity. It’s concentrated among buyers looking to upsize, from either their existing or a neighbouring suburb, or from nearby suburbs with similar desirability.”

Shifting market conditions.

CoreLogic’s Home Value Index shows Sydney’s property market reached a new milestone in May, posting a nominal recovery, equalling the earlier record high set in January 2022.  

Sydney dwelling values dropped by -12.4% following the January 2022 peak, finding a floor a year later. The market has since increased 14.1% through the cycle to-date.

In May, the Federal Budget announcements and ongoing interest rate uncertainty have contributed to market diversity and nuanced outcomes across property segments, geographically and at different price points. 

 

 

The predominant forecast among economists that rates would be cut in 2024 has now been pushed out to 2025, a prospect that has unnerved some buyers. Mr McGlynn noted that while this has not, and will not, impact every buyer – such as those that are not reliant on mortgages – there was slightly more caution in the market.

“With us now half-way through the calendar year, we do expect some buyers will retain their sense of caution over the coming months, until there is more clarity on if and when rates will come down. We are seeing this play out in real time at auctions almost every weekend, where bidding often opens strongly with many interested parties, but stops immediately once budget limits are reached.”

“Right now, the middle and bottom end of the market are largely being affected by affordability constraints and mortgages, while the top end is more concerned by macro sentiment. What they’ve all got in common is they’re responding to the conditions in a more strategic and cautious manner, that aligns with their budgets and tolerance for risk,” Mr McGlynn said.

 

Consumer sentiment is also affecting other internal indicators. Listing volumes increased during May, as did sales transactions, however overall auction volumes have softened. In the year-to-date, 28% of BresicWhitney’s listings and 20% of sales have occurred ‘off-market’, a trend that’s expected to continue through Winter and into Spring, due in part to these changing consumer dynamics. “We continue to see strong appetite for off-market opportunities and expect this to remain well into the future. Not only due to the lack of traditional marketing spend required, but due to the speed, efficiency and at times, confidentiality, of which buyers and sellers can come together to achieve a result.”

 

Top results.

A house built by the late Clyde Packer, brother to the late Kerry Packer, and designed by architect Guilford Bell in 1968 at 123a Queen Street, Woollahra was BresicWhitney’s top sale in May, achieving a price of over $12 million, prior to auction.

One of Redfern’s largest single dwellings on 806sqm, was the second highest sale across the month, at $7.3 million. Known as ‘Currency House’, the property at 201 Cleveland Street overlooks Prince Alfred Park and is currently a mixed-use three-level residence. A number of well-located and unique homes commanded price upwards of $4 million, across the Inner West, from Glebe, to Lilyfield, to Marrickville, and in Hunters Hill.

 

Emerging prestige rental trend.

The scarcity of prestige homes in Sydney available for buyers is contributing to an increase in demand for luxury rentals, as some owners opt to lease rather than sell their unique, multi-generational homes.

BresicWhitney leased 135 homes in May, slightly above this year’s monthly average of 110, with a vacancy rate of 1.0%. The stand out property for the month was a Mediterranean-inspired waterfront estate in Northbridge on Sydney’s Lower North Shore, which was offered for $8,000 a week to the market. The home had an impressive seven bedrooms, two jetties, a waterfront pool and a boathouse.

 

Mr McGlynn said the types of Sydneysiders most likely to lease these properties were executive couples or families, who often rented for a variety of reasons, including waiting for the opportunity to buy their own home in the immediate area or to establish the right location for their lifestyle. “There’s very little difference in the financial circumstances of the owners of luxury properties and the tenants of these homes, they’re both high-net-worth individuals,” Mr McGlynn said.

“Overall, we are seeing demand for prestige rentals being dictated by tight stock levels in these sought-after areas. If an owner’s circumstances change, or they move, they’re often reluctant to sell because they risk they run of being priced out of the trophy market. That’s why we see these owners, who are in a financial position to do so, offer their homes for lease, rather than sell.”

 

An early Winter?

Early Winter property trends indicate Spring-like activity has been brought forward in 2024, with conversations about selling underway with many prospective vendors during May, BresicWhitney can reveal. 

This suggests there will be an increase in Spring listings – including a higher-than-average proportion of off-market opportunities – as many sellers anticipate more subdued conditions over the coming months. Demand for apartments – a defining trend of the past 12 months – is also likely to continue, in part driven by wealthy tree changers looking for a Sydney bolthole, and businesses mandating the partial or full return of their employees to the office. 

 

BresicWhitney’s apartment data reflects this, with 163 apartments having sold across January – May; a 20.8% increase on the same period in 2023. 

Mr McGlynn said more than three in five of BresicWhitney’s sales this year were apartments. Not only a reflection of affordability for first-home buyers, but a figure that’s demonstrative of the exit of some investors from the property market. 

 

“When people started coming back to work, they were mostly renting apartments in the city, but that changed when rents surged,” Mr McGlynn explained to the Australian Financial Review in May. “We’ve seen more people deciding to buy an apartment instead of renting because many are cashed up or they’ve built significant equity in another property, and can see that established Inner-City Sydney apartments offer good value for money.”

Despite Sydney’s unit values outperforming houses in May, increasing 0.7% compared to houses 0.5%, they retain a substantial affordability gap of almost 70%, according to CoreLogic data. Asking rents for apartments have increased 7.8% in the year to 31 May 2024, re-accelerating last month, amid persistent rental supply shortage.

 

BresicWhitney Head of Property Management Chantelle Collin said that while variations in the rental market would remain, more stability was expected to be evident across Winter. “As we know, some of the factors that drive movement and pricing changes in the rental market are associated with travel and migration patterns, as well as timings of the tertiary education calendar. As such, we do expect there to be a higher level of stability in the rental market over these months,” she said.

“However, the pressures within Sydney’s rental market remain very real, and are impacting both tenants and owners in different ways. These are areas we need to continue addressing on both an industry and State Government level, to achieve better, more sustainable outcomes that ensure renting remains a viable and attractive proposition for both parties.”