More families choose the high-rise life
The Sydney apartment market may be on the cusp of a buying boom, as priced-out families increasingly stay in units for longer.
Historically, Sydney’s unit market has been dominated by two main buyer groups: downsizers and investors. But according to Ayre Real Estate’s Adrian Wilson and Craig Donohue, these demographics are about to change.
“In the suburbs of Sydney, downsizers are reluctant to sell their properties due to negative market sentiment and a reduced sense of urgency,” explained Mr Wilson.
According to Mr Wilson, the result of this vendor hesitancy is clear: families seeking to upsize into a detached suburban home are facing high demand, soaring prices, and a major supply shortage.
He stated: “Upsizers seeking larger accommodations face limited options, maintaining the competitiveness of markets driven by upsizers, such as family homes.”
With detached homes increasingly out of their league, Sydney families are turning instead to apartments. One of the most notable trends that Mr Wilson and Mr Donohue have witnessed in the past 12 months is a growing number of multi-generational families in apartments.
These multigenerational living dynamics are reportedly “developing a trend towards buyers favouring larger penthouse-style apartments capable of accommodating extended families.”
Right now, Sydney buyers seeking apartments may have a rare window of opportunity. In 2023, elevated interest rates and inflation “compelled vendors to divest surplus investment holdings, expanding choices for buyers.”
The exodus of investors from the apartment market resulted in a unique supply surge in spring 2023. Starting in August, Sydneysiders saw a wave of new listings flow onto the market, particularly “a surge in high quality properties hitting the city and inner-city apartment markets.”
This influx, which Mr Wilson explains “would have swiftly sold in previous years,” was not snapped up by downsizers and investors as readily as usual.
High interest rates, reduced borrowing power, and soaring livings costs mean that many Sydneysiders are forced to stay in the city’s competitive rental market for longer. For those with the means to buy, however, the wariness of their competitors opens up a rare chance to snag a good apartment.
The lull is not set to last long – according to Mr Wilson and Mr Donohue, Sydney and Melbourne will both see a “general shortage of new units over the next few years” as construction bottlenecks and planning delays continue to set the pace of new builds back.
Over the next year, the Ayre Real Estate team also anticipate that Sydney’s inner-city apartment market “may see general growth of around 5 per cent in 2024.”
For now, however, freer supply and anxious demand opens up strong options for homebuyers and investors seeking to take the plunge into Sydney’s unit market.
“Current market conditions present a remarkable opportunity for savvy buyers to invest in apartments,” Mr Wilson concluded.
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