Sydney values 'likely to hold up in 2024': REINSW

It might take 10 years for the median household to save up a 20 per cent deposit on the median-priced Sydney home but the REINSW still expects a resilient market to hold its ground, or more, in 2024.

Terraced houses in Sydney
Renters and first home buyers in Sydney face a tough task made worse by Real Estate Institute of New South Wales (REINSW) expectations that property or rental price falls are a remote prospect. (Image source:

Amidst 13 interest rate rises in nearly as many months, the resilience of residential property as an investment has been reinforced in 2023.

Prices have continued rising despite the increased cost of borrowing and repayments.

Even though the Reserve Bank gave mortgage holders a reprieve at its December meeting, the desperate shortage of property in New South Wales means that even if there’s another rise or rises in 2024, values are likely to hold up.

That’s because we have an increasing population. Renting has become an impossibility for many people. We’re in a market in which they have to buy. But it’s easier said than done.

According to November’s ANZ CoreLogic Housing Affordability Report, it would take 10 years for the median household to save up a 20 per cent deposit on the median-priced Australian home.

People need to buy now but it’s simply impossible given the high prices, the cost of renting, and the time it takes to accumulate a deposit. For buyers who navigate these hurdles, there’s still the need to compete for the few homes available for sale.

As we prepare for a new year, the gap between the haves and have-nots is widening.

Devaluing housing might be one way to close the gap, according to some. But that’s not happening; interest rate rises prove this, and why should we seek to devalue what’s there?

Instead, why don’t we focus on providing more people more choice to participate in the housing market?

Why not create a tax environment in which a person’s investment in housing is encouraged and not discouraged?

Property policies falling short

This year, we’ve been inundated with announcements and policies which will supposedly be the solution to the housing supply crisis.
We’ve heard plans for CBD office space to be re-purposed as residential. Plans for the emerging build-to-rent model to be more widely applied.

We’ve seen major residential rezonings announced with the promise of thousands of new dwellings attached. Higher density opportunities in exchange for increased affordable housing quotas.

All the while, the development community sits idle. The feasibility for many new projects just doesn’t stack up. The supply side solutions released with such fanfare remain at odds with the tax-driven new supply disincentives, which for so long have plagued the market.

The most crucial societal challenge for governments at all levels in 2024 is to increase investment into the residential property market.
Aspiring owner-occupiers deserve the choice to buy a home. Aspiring tenants need a home to rent. But as we’ve seen, treating landlords as anything other than investors in a market means driving them away, which is the predicament in which we now find ourselves.

Investors deterred by shifting regulations

Free markets have a way of solving supply and demand problems, just as tinkering with markets has a way of causing them.

Investors in residential property know all about tinkering; threats of rent freezes and rent caps, even as repayments change; removed protections for properties, like forcing investors to accept pets; reforms enabling tenants to break their lease without warning.

The risk profile keeps changing and as it does, the level of investment in residential property decreases. Addressing the rental shortage means addressing the areas where this leakage is occurring. Doubling down on anti-landlord rules and reforms has not worked.

It’s time to focus on the opportunities for actual, positive reform. And there are some positives to consider.

In 2023, the resilience of residential property has been on full display. The ground lost in values through Covid has been recovered.
But there remain some deep, structural problems in the housing market.

It all comes back to supply. Everyone needs a roof over their head. The start of a new year should be a time for optimism. Persisting with the same approach means nothing will change. Hopefully, in 2024, we’ll see something new.

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