Sydney property in 2023 has already been defined by intense buyer activity and strong attendance, a shift from usual January market patterns that often emerge gradually.

With 4457 groups through BresicWhitney homes already, more people inspected last month than in January 2022 (when the market was much stronger), and we saw more than 10 times the numbers of December.

At the same time, Sydney experienced a lack of new listings to kick off the year, with stock levels much lower than normal. New properties launched on REA were at half the levels of October, and 40 per cent less than November.

On figures from CoreLogic in January, new listings were tracking about 26 per cent lower than the previous five year average and were 20 per cent down on the same time in 2022. The total number of homes on offer was 32 per cent below the previous five-year average.

Those launching properties in 2023 have been facing less competition, while engaging buyers starved by the lack of choice. As the first big auction Saturdays take place in the coming weeks, the level of buyer competitiveness should start to reveal itself more.

With 85 new listings signed in January 2023, this also outstripped numbers seen in 2019, 2021 and 2022. With 77 auctions booked for February 23, indicators suggest multiple parties are prepared to bid on the majority of those listings, a contrast to late 2022 conditions.

 

BresicWhitney CEO Thomas McGlynn said the early signs were promising and he expected to see this unfold into a more balanced market.

“Our projections are that we could see more properties come to market than in previous years, creating healthier listings levels and a more fluid ecosystem to navigate, especially when you factor in the amount of people who are still looking for homes,” Thomas said. “We actually need more property to come onto the market to set that natural balance.”

“Property trends in 2021 were heavily in favour of sellers, while 2022 was much more of a buyer’s market. But a healthy Sydney property market is when we see balance on both sides of the purchase.

“We now see most major forecasters predicting two consecutive months of interest rate rises and I think both buyers and sellers are expecting that too. At the same time, I feel we’ve moved through the worst of any market headwinds and in many markets we are already seeing a more stable environment.”

 

The new wave of buyers have been impacted by these rising mortgage costs and growing interest rates. While the level of January demand we’ve witnessed would usually lead to uplift in prices, most predictions have stopped short of guaranteeing an instant swing in values.

From the market peak in January 2022, values have now adjusted 12.1 per cent down across Sydney. However, the adjustments haven’t been enough to offset the sharp rises in mortgage repayments, leaving some uncertainty about where the level of competitiveness would sit in 2023.

However, Domain’s chief of research and economics Dr Nicola Powell said last week: “We would need to see significant a pullback in price that exceeds what we’re seeing to equal the mortgage affordability of rock bottom rates.”

That would be unlikely to happen, considering no downturn has erased the gains in the boom that preceded it, historic data shows.

“We’ve never seen an upswing erased by a downturn for Sydney house prices over the last 30 years, that’s never happened, it’s unlikely to erase the growth,” she said.

Property values in Sydney dropped 1.2 per cent in January, marking the first time in nearly two years that homes are worth less than $1 million on average. Meanwhile, the rate of decline slowed and the premium end of the market showed early signs of a turnaround.

 

At the upper end of the market, prices have continued to show positivity with a much slower rate of decline. According to Domain, the median price of four-bedroom homes far outperformed the market in the past 12 months, even showing signs of price lift in the last quarter.

With the market expected to reveal more patterns in February, sellers would be hoping for more signals like this.

In the rental market, the demand for properties has hit an all-time high with the headlines about Sydney’s “rental crisis” a widespread reality.

Where it was normal for BresicWhitney to have 80 or 90 active listings at any one time, the vacancy list has been hovering around 30. The properties that saw the biggest reductions in price are now seeing the most uplift, bringing their prices back inline with 2016 levels (the last time the market was at its peak).

BresicWhitney head of property management Chantelle Collin said the 2023 market was expected to tighten even further.

“Sydney needs more homes to meet the demand and we’re certainly feeling that,” she said. “There is now an influx of international students arriving and we’re yet to see the effect of immigration and the international workforce.

“We’re managing tenants who are under pressure, along with many landlords who are trying to balance the effects of interest rate rises.”

Looking behind our rental listings, we leased 88 properties in January at an average price of $956 a week. The same period a year ago saw 131 leases with an average rent of $780.

These increasing rental prices have become a sign of the restricted supply in the face of new demand.