Sydney's Population Growth

Sydney's real estate market is set to experience significant shifts in 2024, primarily influenced by the city's continuing population growth. This article provides an updated analysis of the current trends and future predictions for Sydney’s housing market, shaped by the steady influx of residents.

Influence of Population Growth

Sydney is expected to gain a million new citizens over the next decade, primarily from overseas, bringing the population to 9.1 million by 2033. This growth, a blend of skilled immigrants and international students, exerts substantial pressure on the housing market, particularly in the rental sector.?

The city's population grew by 1.3% in the 12 months leading up to September 2022, highlighting its status as a magnet for new residents. With the influx of nearly 500,000 migrants per annum (with around 30-40% of them settling in Sydney) there is still substantial population growth to come.

Property Price Growth and Market Dynamics

Economists from major banks predict a rise in house prices of between 3% and 5% in 2024. The Commonwealth Bank of Australia (CBA) forecasts a 5% growth across Australia, with Sydney’s house prices expected to rise by 4%.?

Despite the Reserve Bank's cash rate hikes, the median house price in Sydney is expected to see a 6% increase in 2024. Strong population growth and infrastructure projects are contributing factors to this expected rise. Ultimately it comes down to the basic economic fundamentals of demand and supply.?

There is simply not enough stock. Several factors have contributed to this, namely the rising cost of construction seen post-COVID, and rising interest rates as a result of raging inflation (again thanks to the COVID pandemic). This double whammy left developers gun-shy and has resulted in declining numbers of new developments coming to market as demand continues to surge (see migration above!)

Rental Market Adjustments

The rental market in Sydney is set for several changes. While rental prices have continually increased, growth is expected to slow down in 2024. This slowdown will be driven by stretched affordability, leading more renters to opt for shared housing.?

First-home buyer incentives will also help some transition to ownership or more affordable purchases. Indeed, this is a trend we are starting to see more of. More and more First Home Buyers are leaning on the bank of ‘mum and dad’ and looking to enter the property market.?

They will have competition though as research shows that in their first couple of years, most migrants look to rent or own an apartment and with supply levels very low (we just covered this) this should place even further upward pressure on both rentals and sales.

Market Resilience and Recovery

Sydney's property market has shown resilience and recovery, particularly in the apartment markets of inner-city areas. The imbalance between supply and demand, with shortages in new dwellings and homes for rent, has contributed to this growth.?

The Sydney City municipality has emerged as one of the strongest markets in the Greater Sydney metropolitan area. Rising demand for both rentals and sales has been driven by rising population growth in these areas, particularly areas that run along the new metro lines.

Conclusion

As Sydney navigates through 2024, the city's real estate market is expected to be driven by strong population growth, evolving market preferences, and economic conditions. The demand for housing, particularly in the apartment sector, along with the city's economic resilience, shapes a promising yet dynamic future for Sydney's real estate market.?

Keep an eye on migration numbers, and planning approvals as we watch the delicate dance between demand and supply play out, in Australia’s most desirable city.

As with any market predictions, these trends are subject to change based on various influencing factors, and it's crucial to stay informed and seek expert advice when navigating the real estate landscape.