Quarterly house price growth: Sydney’s affordable pockets boom
Rate cuts have unleashed a buying frenzy with a handful of Sydney suburbs recording price jumps that housing experts are calling “out of the ordinary.”
Home prices have been growing at three times the rate of inflation in many parts of Sydney as interest rate cuts from earlier in the year continue to usher in more property buyers into the market.
New exclusive data from PropTrack has revealed more than half of Sydney’s suburbs have risen in price over the past quarter, thanks to two rate cuts bringing the cash rate down to 3.85 per cent.
The biggest rises have been observed in some of the most affordable unit markets, with the rate cuts launching a scramble for the cheapest real estate deals near major commuter hubs.
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It comes as housing experts warned the Reserve Bank’s surprise decision to keep the cash rate on hold at its Tuesday monetary policy meeting would fail to stifle the growing sense of urgency among new buyers.
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Units in Ashcroft, Wahroonga, Belrose, Cartwright and Sadlier all jumped by 10 per cent or more in just three months, as affordable pockets under the city’s lofty median price of $1.182m captured buyers.
REA Group Senior Economist Anne Flaherty said a double digit increases were an “enormous” jump for such a short period of time.
“That is absolutely out of the ordinary,” she said. “Particularly we are seeing that those suburbs that are relatively more affordable are attracting a high level of competition.
“The reality is because the median price of a home in greater Sydney is so high, for a lot of people that are looking for a middle ring suburban Sydney home, it’s just not even a possibility.”
The data showed the typical unit in Wahroonga had now surpassed the $1m mark, increasing by more than $100,000, while houses in Menangle had jumped by $130,000 to $1.169m.
“Over time, the proportion of the total buyer pool who are looking for those more affordable suburbs is growing and we’re getting more and more people priced out of those suburbs that are closer to the median Sydney price,” Ms Flaherty added.
Ray White chief economist Nerida Consibee said the interest rate hold would not be enough to stop the market’s “remarkable momentum.”
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“The pause may simply be a temporary reprieve rather than a change in direction … Sydney is very sensitive to rate cuts,” she said, noting Sydney’s sky-high prices were unreachable for many and rate cuts would boost their chances.
“The rate hold will slow things down a little bit, but it will also slow the amount of properties going to market, even though buyers are increasingly back, we are not yet seeing a significant pick up in properties for sale,” she said.
“The cheaper end of the market is doing well not only because of rates but because there is a lot available to first home buyers now given the range of incentives that make it an easier entry into the market,” she said.
Young couple Steven and Elizabeth Gardner have just sold their home in Plumpton to upsize with their two young kids Lily and Archie.
They were able to secure a four-bedroom home around the $1m mark.
“The housing market is pretty daunting,” Mr Gardner said, grateful to have purchased their first home back in 2016 for around $500k which sold in July for $791,000.
“I don’t know how young couples are doing it now without a bit of help from mum and dad,” he said.
“But we knew if we didn’t buy now with the way interest rates were going, it was only going to get worse.”
Their agent, McGrath McGrath West’s Trent Zahra said he’d noticed a clear shift in buyer behaviour, especially first homebuyers and young families desperate for affordable options.
He noticed many buyers from the North West were moving further west to get into the market under $800,000.
“That’s really driving prices up,” he said. “But we are still experiencing a lack of stock, especially of ‘move in ready’ family homes,” he added.
“Many are turning to strata properties even if its not the most ideal, with affordability these days you have to take the risk just to enter the market.”
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Originally published as Quarterly house price growth: Sydney’s affordable pockets boom