Real Estate Sydney: million dollar line that divides the Harbour City

What homebuyers are willing to spend is changing dramatically and says a lot about where Sydney and its real estate market is at.

The amount home buyers are looking to spend has changed dramatically over the past few years, but not all parts of the property market have been equally impacted.

When an individual searches to buy property on realestate.com.au, they have the option to include a maximum price threshold. Looking at price searches is helpful because they can act as a lead indicator preceding what happens in market.

Back in December 2019, 47 per cent of those looking to buy in Greater Sydney were searching for properties priced at above $1 million. Cut to March 2020 and the Reserve Bank’s decision to slash interest rates pushed the share of $1 million plus searches up to 61 per cent.

$1m is where it’s at for Sydney buyers. Picture: Julian Andrews.

MORE:

$10m beach pad to be given away for $5m

Epic Sydney batman cave returns

What followed was one of the fastest episodes of price growth in Australia’s history.

Increased borrowing power, and assurances by the Reserve Bank that they would not increase interest rates until at least 2023, enabled and encouraged property seekers to buy at a higher level.

By early 2022, the share of all $1 million plus buy searches had surpassed 70 per cent in Greater Sydney, peaking at 73 per cent in June.

But with interest rates now at the highest level since 2015, buyers are more constrained, and this is being reflected in searches.

Among those looking to buy houses in Greater Sydney, the change has been most notable at the $1.5 million plus level.

Househunter are now willing to spend a lot less. Picture: Newscorp- Daily Telegraph / Gaye Gerard

Between June and July, every price category above $1.5 million saw a decline in the share of searches. At the same time, there was a corresponding rise in the share of searches between $500,000 to $1.5 million.

The same trend holds true among those searching to buy units.

Here, properties valued below $500,000 have seen the largest rise in the share of searches, with the largest drop at the $2 million plus level.

These changing search preferences are already flowing through into decreasing median prices, a trend that is likely to continue through to the end of the year at least.

Anne Flaherty in an Economist at PropTrack.

MORE: Sydney’s most popular streets revealed

Quirky home perks luring shy buyers

Buyers call shots as listings jump to 3-year high

Originally published as Real Estate Sydney: million dollar line that divides the Harbour City