Breakfast Point View

Sydney Inner West - Summer 2024 Property Review

Breakfast Point View
Mar 05, 2024

House prices within the Inner West skyrocketed to new peaks this quarter, despite the fallout of interest rate hits in full effect. This rise was supported by limited available stock, the strong rental market pushing first home buyers and investors to purchase, the continued post pandemic international influx and buyer interest, and demand from cash ready buyers unaffected by economic fluctuations.

More than doubling greater Sydney’s already steep annual growth, the city’s median house price rose 10.6% to almost $1.6m. Unit prices rose 6.3% to about $796k, with Glebe topping the list, up 21.3%. While Marrickville, Balmain and Newtown were amongst the most undersupplied suburbs in NSW, as stock on the market in proportion to the total dwellings sat at 0.4%, 0.34% and 0.33% respectively.

As is generally the case outside of rapid changes in RBA rates, buyer pool and capacity to pay tend to move in lockstep. This quarter bucked this trend, as prices increased despite financial capacity remaining low. Which makes little sense in a normal economy, though ours has been anything but. With the numerous savings buffers developed through the pandemic due to constrained demand and government stimulus, and the rise of the bank of mum and dad in both first home buyers and upgraders, consumer affordability has become complex and layered. Capacity to pay and income are no longer tied together. These statistics, likely influenced by a small cash strong subsection of the market, have created questions around sustainability. As the gap widens, and households hold back on non-discretionary spending, home ownership is becoming increasingly out of reach to those without generational wealth transfer.

Family homes attracted good interest from local and out of area buyers, as did entry-level units in older blocks. Demand for homes within the $2m-$2.5m bracket was high.

Across the board, minus the Peninsular, the majority of buyers appeared to go on holidays, suspending their property searches earlier in the season than generally occurs historically. Buyer fatigue was high, with low stock throughout the quarter the deciding factor to opt out until early January. This saw a shift from a sellers market into a more balanced market close of year.

Overall, sentiment was lacklustre, as Frederico Fraga-Matos from Bresic Whitney said, “This quarter saw buyer energy decreased and low, with tight stock levels”. Jack Tinworth from Cobden Haysen further summed up the close of year, “The conclusion of the 2023 selling season saw many buyers feeling fatigued, navigating through rate hikes, attending inspections, and experiencing the disappointment of missing out at auctions”.

  • Bayside
  • The Peninsula
  • City Fringe

Balanced market

This quarter proved yet again that those that buy in the bay area tend to stay, as Alex Cummins from Dib Chidiac said, “The downsizing and upsizing market are still performing strong. A lot of upsizers and downsizers are selling and staying local”. Solid buying opportunities presented themselves through properties around $2m-$2.5m requiring work, in a great location. A quality renovation can boost its value straight away and is always a sound investment in the right hands.

A highlight sale was a turn-key oversized townhouse-style terrace at 1/1 Shore Road in Chiswick. The owner of this 2 bedroom 2 bathroom 2 carport apartment was selling to upsize, the buyer to downsize. It attracted multiple offers, selling competitively for $1.365m.

A premium single level 361sqm penthouse property with show-stopping views sold at 509/28 Peninsula Drive in Breakfast Point. This 3 bed 2 bath 2 carport apartment brought in a suburb record, the final price of purchase $4.45m.

A brand new piece of Concord luxury, a 5 bedroom 5 bathroom 2 car home at 151 Burwood Road, moments from the waterfront edge and golf course, sold for $5.9m.

The Peninsula

Balanced/Sellers market

This sector differed from the inner west as a whole as it was a big performer right up until the end of 2023, with many agents short on stock and a lot of active buyers. Though highly price sensitive, it was definitely a sellers market.

Fully renovated homes traded well, while owner occupiers remained reluctant to take on big renovations due to building costs. Opportunities were found through over guided properties or pre-market.

Homes in need of renovation still faced reduced competition due to concerns about building costs and inflation. Therefore, those renovation savvy buyers who had access to skilled trades saw excellent opportunities to purchase undercapitalised homes and substantially increase their value. Jack Tinworth from Cobden Haysen observed another opportunity, “The downsizer market always tends to outperform the other sectors as home’s suited to this buyer pool don’t trade as often”. On the other hand, turn-key homes performed well, as buyers recognised the time and effort invested in a well-executed renovation.

A great example of this was the sale of a 3 bed 2 bath newly transformed weatherboard home at 48 Short Street, Birchgrove. This 3 double bedroom 2 designer bathroom beauty made $2.635m at a competitive auction.

Another sales highlight, an updated renovation townhouse with panoramic city and bridge views at 77a Ryan Street in Lilyfield, 3 bed 2 bath 2 car, sold for $2.5m.

City Fringe

Balanced Market

In the city fringe it is becoming increasingly challenging to find a bargain. This quarter, unrenovated homes attracted many registered bidders for competitive auction, presenting buying opportunities for builders/developers to flip, or a fixer upper for those with access to trades. Though this is only suited to a small subset of buyers, as Arden Savio from Bresic Whitney added, “Typically the buyers that purchased well were the ones who bought in a building with some issues in the process of being resolved in the near future. They then could hold and sell once these issues are fixed and the reports become cleaner. This goes the same for houses that have problems on first viewing, as it deters most buyers from doing further due diligence. Buyers who can look past these obstacles and understand the costs/work required bought for a cheaper amount and will sell for good prices in the coming years”.

2 Bedroom semis performed well, still achievable and decently priced for many budget wise buyers, while 3 bedders averaging around $2m continue to attract the most demand, increasing in popularity year by year. Frederico Fraga-Matos from Bresic Whitney added, “Lots of 1st home buyers in the $1.5m-early $2m range were out and about at unit inspections, however the follow through was less vs the actual inspections. There were a number of upgraders/upsizes out there in the market as well”.

The Inner West – Looking ahead to Autumn 2024

Sydney reached a historically high peak in 2023, with price growth at unsustainable levels. The start of 2024 has seen stretched affordability weighing on buyer demand, and an uptick in listings giving buyers more choice. This growth looks set to slow until interest rates fall. Joseph Fenech from Hudson McHugh predicts good things, “It is going to be hot and busy. Listing numbers are definitely up there and there seems to be a good amount of new buyers entering the market”. Brandon Nguyen from Bresic Whitney added to this, “It feels positive, however, the first auction weekend mid-February along with the interest rate decision will likely set the tone for the first half of the year”.

With seller confidence on the improve as the Reserve Bank holds interest rates steady at 4.35%, there is a collective sigh of relief. Prices will likely hold until expected rate cuts due the second half of the year. Arden Savio from Bresic Whitney said, “For some buyers there is an urgency to buy in the coming months due to the talk in the market/media about interest rates coming down towards the back end of the year. Personally, I bought at the start of Summer because of this very reason. I think the buyers that can bite the bullet now will reap the rewards when it comes to their asset’s capital growth in the coming years”.

As a long unfamiliar stability re-enters the market after a rolling series of rate hikes in 2022 and 2023, sideline buyers are stepping forward. Alex Cummins from Dib Chidiac, “High buyer demand and fear of loss will continue over the coming months. Buyers who missed out on properties last year will now be in competition with a bigger buyer pool due to the influx of more buyers entering the market at the start of 2024”.

Overall, prospects are looking decidedly favourable, Jack Tinworth from Cobden Haysen said, “As we connect with buyers over the phone, there’s a noticeable surge of renewed energy. Despite lingering uncertainties surrounding potential further rate hikes and a post-Christmas decline in consumer spending, the conversations are filled with positivity. It’s evident that there is an eagerness for the new wave of properties to hit the market”.

Sydney Inner West Area Specialist
Hamada Alameddine

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