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Sydney Residential Insight Summary (Q4 2023)

Core Content Overview

This report provides an analysis of the residential market in Greater Sydney, covering sales, rental performance, new builds, and key economic indicators influencing the market. The data reflects trends from September 2023 and forecasts for the next few years.

Main Market Trends

Sales Performance

• Total Sales Volume:
  • 83,919 residential homes (houses and apartments) were sold in the September 2023 quarter.
  • Annual sales volume fell by 12.8% compared to the previous year.
• House Sales:
  • 47,022 houses were sold in the September 2023 quarter.
  • Annual house sales volume decreased by 14.8%.
  • Average days on market for houses: 47 days in September 2023, 57 days three months earlier, and 47 days one year ago.
• Apartment Sales:
  • 36,897 apartments were sold in the September 2023 quarter.
  • Annual apartment sales volume decreased by 10.3%.
  • Average days on market for apartments: 70 days in September 2023, 82 days one quarter earlier, and 69 days one year ago.

Price Performance

• Median Residential Value:
  • $1,229,000 as of September 2023.
  • Annual increase in median residential values: 6.4%.
  • Quarterly increase in median residential values: 1.9%.
• Median House Value:
  • $1,578,000 as of September 2023.
  • Annual increase in median house values: 8.1%.
  • Quarterly increase in median house values: 2.1%.
• Median Apartment Value:
  • $781,000 as of September 2023.
  • Annual increase in median apartment values: 2.1%.
  • Quarterly increase in median apartment values: 1.2%.

Rental Performance

• Total Residential Vacancy Rate:
  • 1.6% in September 2023, up 10 bps from the previous year.
  • A 3% vacancy rate is generally considered balanced.
• Gross Rental Yields:
  • Increased by 46 bps in the year to September 2023, averaging 3.64%.
  • For houses, gross rental yields were 2.96% in September 2023, up 26 bps from the previous year.
  • For apartments, gross rental yields increased to 4.52%, up 72 bps from the previous year.
• Rental Growth:
  • Residential rents increased by 2.2% in the September 2023 quarter, with an annual growth of 15.7% to $700 per week.
  • House rents rose by 2.9% in the quarter, with an annual increase of 10.8% to $720 per week.
  • Apartment rents increased by 1.5% in the quarter, with an annual growth of 23.6% to $680 per week.

New Builds

• Annual Building Approvals:
  • Total approvals in September 2023: 32,214 additional dwellings.
  • Annual decline: 12.2% compared to the previous year.
  • House approvals: 13,207, down 16.4% from the previous year.
  • Apartment approvals: 19,007, down 9.1% from the previous year.

Economic and Demographic Indicators

• NSW Economic Growth:
  • 2.2% in 2022, with a forecast of 2.4% in 2025.
• Unemployment Rate:
  • 3.3% in September 2023.
• Official Cash Rate Target:
  • 4.35% in December 2023, with a forecast of 3.9% in 2025.
• Population Growth:
  • 0.8% annual growth in 2022, with a forecast of 1.4% in 2025.

Market Forecast

• Price Growth:
  • Forecasted to rise by 7% at the end of 2023, 6% in 2024, and 6% in 2025.
• Rental Growth:
  • Expected to increase by 16% at the end of 2023, 11% in 2024, and 8% in 2025.

Key Drivers

Key Insights

• The Greater Sydney residential market continues to show strong price and rental growth despite a decline in sales volume.
• Apartment markets are outperforming in terms of rental growth and gross rental yields.
• The tightening of selling times for established houses is contributing to better price performance.
• Economic growth and population trends are expected to support continued market activity.

Contact Information

• Michelle Ciesielski (Residential Research): +61290366659, michelle.ciesielski@au.knightfrank.com
• Grant Bulpett (Residential Site Sales): +61415558226, grant.bulpett@au.knightfrank.com
• Sally Edvardsen (Franchise Partnerships): +61290366845, sally.edvardsen@au.knightfrank.com
• Erin van Tuil (Residential): +61409325700, erin.vantuil@au.knightfrank.com
• Chris Hill (Valuations): +61438807249, chris.hill@au.knightfrank.com