It was a tale of two halves in October for sellers and buyers of Sydney property, as a confluence of ongoing market factors created a highly nuanced and at times, fickle environment.  

While overall buyer demand remains healthy, there was a more pronounced willingness among sellers to meet the market and transact in October. BresicWhitney data revealed that out of all group properties sold at auction, 24% of them were done so after the auction reserve was adjusted. A healthy portion of properties initially booked for auction, also sold prior to auction (48%), illustrating the keenness from both sides to maximise opportunities. Out of all properties sold by BresicWhitney across the month (98), 15% were sold off market, further demonstrating ongoing levels of activity. 

 

The most competitive sales results across the month were achieved for the more unique properties, including the sale of 223-225 Australia Street, Newtown – a former butcher and barbers’ shop – which had been owned by the same family for over 20 years. Its sale price of $3.4 million reflected a $715,000 increase on the price guide, achieved after five bidders pursued the residence. Meanwhile, a former boarding house dating back to the 1860s at 171 Albion Street, Surry Hills sold for $2.8 million. 

 

 

A noticeable change in tone among buyers however did cement itself in October and contributed to an overall slowdown across the market. BresicWhitney perceives this as the emergence of not only the longer-term impacts of the current cash rate cycle, but localised inflation and geopolitical instability. The RBA is expected to lift the current 4.10% cash rate further at its November meeting. 

 

While BresicWhitney continues to successfully sell properties within a timeframe that is approximately 10% less than the industry average (REA Group data), it recorded an 18.5% increase in days on market for listings in October compared to the month prior.  

The shifting conditions were also reflected in CoreLogic’s October House Price data, revealing a 0.8% increase in growth across the period. This followed the modest 2.5% price growth in the three months prior (Q323) – a figure that was significantly less than the 5.3% achieved in the previous quarter (Q223).  

 

 

BresicWhitney CEO Thomas McGlynn said, “The ongoing cost of living pressures, global geopolitical instability, and localised occurrences have shifted the tone in the Sydney property market away from the dominant sense of optimism and stability that we saw throughout Winter. The pendulum has been swinging at times what feels like quite aggressively in terms of who the market is favouring, and while it is starting to come back to the centre, we are engaging in more conversations with not only sellers and buyers, but the industry, around what’s next for the market. Overall, we see once again that there are many complex considerations that factor into property decisions of Sydneysiders – more so now than we’ve seen in the last three months.”

 

Mr McGlynn added this had and would continue to set the tone for a variable end of year and start of 2024, given October is historically and seasonally, one of the strongest selling months of the year. “Great opportunities do remain in the market but it’s important to not lose sight of the local and global influences that have the power to change how Sydneysiders perceive and engage with the property market.”

Furthermore, a BresicWhitney analysis demonstrates the rising prevalence of investors selling in the market, as the economic conditions trigger the sale of some tenanted properties. 71 of BresicWhitney’s investor clients enquired about selling across the third quarter, versus 65 in the prior quarter, and a comparatively modest 34 in Q322. This demonstrates an increased intent among investors to sell year to year. CoreLogic also reported that across Sydney’s Inner City markets, 57% of new listings in Q323 were investment properties. 

Head of Property Management at BresicWhitney, Chantelle Collin said there were ongoing challenges in the rental market for both owners and tenants. “Undersupply is the leading challenge in the rental market and is the driver of affordability concerns for tenants across Inner Sydney. However, yields are becoming more attractive again for potential investors.  If this translates to an increase in investors purchasing property and a reduction in investment properties being listed for sale, we will see an increase in supply for tenants and ultimately lead to a more balanced marketplace in 2024. A theme of our conversations with our investor clients focuses on the long-term strategy of property ownership, and how to navigate the varying changes that occur along the way in line with each property cycle, of which we are feeling to a great degree at present.”  

Australia’s national vacancy rate sits at a record low for the second month in a row, at 0.8%, according to Domain, with Sydney reporting a 0.9% vacancy rate. In October, BresicWhitney met over 1000 potential tenants through its leasing team, transacting on 107 rental properties, at an average rental price of $855. These figures highlight the demand to secure a property in the Sydney rental market, and the ongoing co-dependency and critical relationships between investors and tenants.