NSW Property Values Expected to Stabilize Amid Rising Interest Rates

As the property market in New South Wales (NSW) reacts to rising interest rates and increasing supply, property values are expected to stabilize this year. This comes after an 8% rise in values in FY23, a rebound from the 3.8% decline in the previous year. However, this level of growth is not expected to continue as borrowing costs remain high, limiting what buyers can afford to spend.

Both homeowners and investors should understand these market trends to make informed decisions. Whether you’re buying, selling, or holding property, it’s essential to evaluate how rising interest rates and increased supply will affect your financial plans.

Property Values to Stabilize

NSW saw a significant 8% increase in residential property values in the last financial year. But with rising interest rates and an increase in housing supply, the current year is expected to see property values level off. This is particularly true in Sydney, where borrowing costs and high mortgage serviceability requirements are making buyers more cautious.

As interest rates stay high, it’s unlikely we’ll see a reduction in rates anytime soon. Buyers and investors need to adjust expectations in light of these financial challenges, keeping an eye on how this could affect their ability to purchase or maintain property.

Suburban and Rural Property Value Trends

Property values across different regions of NSW have shown varied growth patterns. In Sydney’s outer-ring suburbs, such as Fairfield and Penrith, values have risen by 15% and 11% respectively. These areas remain more affordable, attracting buyers looking for better value further from the city center.

However, mid-ring suburbs, located 15-25 km from the Sydney CBD, have seen slower growth, with increases of only 6-7% in areas like Burwood and the Inner West. This reflects a shift in buyer priorities towards affordability over proximity.

Smaller regional areas, such as Cobar and Gilgandra, have experienced significant price increases. Cobar saw values rise by 45%, while Gilgandra and Bogan recorded gains of 37% and 29%. These regions are benefiting from their relative affordability and smaller market sizes, which have amplified their growth.

Slower Growth in Commercial and Rural Land

While residential properties have shown mixed results, commercial and rural land in NSW have experienced slower growth. Commercial land values increased by 2.9%, and rural land values by 1.4%. This slowdown reflects broader market challenges, including rising costs and cautious investor sentiment.

For those investing in commercial or rural property, it’s important to evaluate the potential for growth in different areas. Diversifying across regions and sectors may provide a buffer against slower growth in certain markets.

What It Means for Homeowners and Investors

Homeowners in mid-ring and outer-ring suburbs should stay informed about market conditions. If you're planning to sell, adjusting price expectations could help attract serious buyers. Buyers, on the other hand, need to factor in rising interest rates when planning long-term mortgages.

Investors should take a cautious approach. Property remains a stable investment option, but the current conditions call for careful evaluation. Exploring opportunities in regional areas, which are showing stronger price growth, or focusing on rental yield potential in outer-ring suburbs could be a wise move.

How Nfinity Financials Can Help

At Nfinity Financials, we understand that navigating the current property market can be challenging. Whether you’re a first-home buyer, investor, or existing homeowner, our team is here to provide expert guidance based on your financial goals.

With interest rates rising and property values stabilizing, it’s more important than ever to have a solid financial strategy. We’ll help you explore your mortgage options, from home loans and refinancing to investment loans, ensuring your decisions are aligned with your budget and long-term plans.

Contact Nfinity Financials today at 1300 GET LOAN or 0 456 456 267 for personalized advice and guidance. Whether you're looking to buy, sell, or refinance, we have the solutions you need to navigate this changing market confidently. Let’s make your property journey a success!