The housing market in Australia has been showing signs of resilience and growth, with strong profits recorded on sales in the last year. This positive trend presents an interesting opportunity for buyers to consider upsizing or expanding their property portfolio.
Equity gains
According to Domain, 95.6% of house sales in Sydney in the 2023-24 financial year made a profit. This profit was also fairly widely spread, with several suburbs in Greater Sydney making more than $1 million in profit.
The high percentage of house sales resulting in profits suggests that the market is buoyant and that property values are likely to continue appreciating. As a buyer, you can benefit from this upward trajectory by purchasing property that is likely to increase in value over time.
The experts agree, with Domain projecting Sydney property values will increase a further 6-8% for houses and 4-6% for units in the 2024-25 financial year.
These figures indicate strong medium-term growth, which is why now could be a good time to secure a property before prices potentially rise further.
Growing equity is important for homeowners. It gives them the flexibility to either reinvest in a new property, renovate an existing home or even leverage the equity for other financial opportunities. It also provides a buffer against market fluctuations, giving homeowners peace of mind in times of economic uncertainty.
Buyer confidence
The strong profits made by sellers over the last year demonstrate buyers’ confidence in the market. If they are willing to purchase property at a higher price, they are confident in its ability to continue growing in value. This is further bolstered by low vacancy rates in Sydney (1.7% in July according to SQM Research), suggesting high demand and strong rental yields, which are particularly appealing to investors.
This positive sentiment is important for supporting demand. When buyers are optimistic, they are more willing to enter the market, leading to increased competition putting further upward pressure on prices.
An increase in the number of listings could also spur more demand, as more listings give buyers more choices. According to Domain, listings in Sydney in August were at their highest since 2022.
By purchasing property now, buyers can position themselves to capitalise on the price growth positive sentiment could bring.
Competition among lenders
The strong demand from buyers has led to an increase in home loan applications. According to the Australian Bureau of Statistics, there were 8,779 new home loan commitments by owner-occupiers in New South Wales in July and 6,156 by investors.
This strong demand for housing finance has intensified the competition among lenders. This could lead to more favourable interest rates and loan terms for borrowers as lenders attempt to win their business.
This situation presents an excellent opportunity for buyers to shop around and find a mortgage that suits their financial situation, possibly securing lower monthly repayments and overall lower borrowing costs.
In a competitive lending environment, buyers also have more negotiating power and can benefit from additional incentives like lower or waived fees and cashback offers.
Buying in Sydney today
Sydney’s current property market conditions could present an opportunity for savvy buyers. With record profits, strong growth projections and high buyer confidence driving demand, the potential for equity gains remains high. Coupled with a competitive lending environment, now could be an opportune time to secure property in Sydney.