Sydney’s housing market saw a record-breaking auction this week with a property selling for $14 million, securing the top spot——Sydney Auction Clearance Rate at 67%

Week’s Key Focus

In this auction, a house took the top spot and sold for $14 million!

According to the Sydney Morning Herald, the housing prices in some Australian capital cities may reach new highs before June next year due to strong population growth and insufficient housing construction.

Based on Domain’s Forecast Report, by the end of the 2024 financial year, detached house prices in Australian capital cities may increase by 2% to 4%, while apartment prices may rise by 1% to 3%. The report suggests that Sydney will experience the strongest price growth, with detached houses potentially seeing an increase of 6% to 9%, and apartment prices rising by 2% to 5%.

However, the Sydney Morning Herald also mentioned that Australian house prices experienced their largest decline on record last year. Some economists had warned of a potential 15% to 20% decline from peak prices. Nevertheless, experts have revised their expectations upward due to the impact of reduced housing supply and increased demand.

Powell stated that Australian housing prices are still rising despite the Reserve Bank of Australia’s interest rate hikes, which contradicts common logic. This situation has occurred in the past, driven by insufficient supply. Two factors will offset downward pressure on prices: first, population growth, with overseas migrants directly purchasing homes without going through the rental phase, and second, domestic housing supply shortages, which may worsen.

Domain’s forecast aligns with predictions from some major banks. Commonwealth Bank forecasts a 3% increase in Australian house prices this year and a 5% increase next year. Westpac predicts stable house prices this year, followed by a 5% increase in 2024. ANZ Bank is more cautious, forecasting flat house prices in 2023 and a 2% increase in 2024. Additionally, National Australia Bank is more pessimistic, predicting a 3% to 4% decline in house prices this year, followed by stabilization next year.

Gareth Aird, Chief Economist at Commonwealth Bank, believes that Powell’s forecast is reasonable. He notes strong immigration momentum that is expected to continue, a tight rental market, and a significant recovery in building approvals. Aird expects an improvement in Australia’s economic conditions next year, which will boost the housing market. They anticipate the Reserve Bank of Australia to cut interest rates next year, which will act as a driver for housing prices. Over time, the overall upward trend in house prices is expected to be sustained.

Auction Results This Week

Sydney: 423 properties participated in auctions, with 276 auction results reported, and 184 properties sold, resulting in a clearance rate of 67%. The total value of auctions amounted to AUD 248,474,111, with a median house price of AUD 1,440,000.
Melbourne: 511 properties participated in auctions, with 371 auction results reported, and 234 properties sold, resulting in a clearance rate of 63%. The total value of auctions amounted to AUD 213,279,075, with a median house price of AUD 1,022,500.