Quarterly Report Q1 2025

There’s never a dull moment in Sydney real estate and the start of 2025 has been no different. Coming off the back of a weak finish in 2024, anticipation was high that Sydney was turning a corner, rates were on the cusp of falling and property values would rebound. Well, what happened? The reality is, we’ve seen a little bit of everything.

The market did rebound with increased buyer energy to start the year. We recorded a 17 per cent increase in online enquiry and a 22 per cent increase in foot traffic through our open homes when compared to the final quarter of 2024. The level of focus and intent to purchase was also far stronger in the first two months of the year, resulting in a number of swift transactions at healthy prices. This set an early tone that trickled through the data as Sydney prices started to show a reversal of the declines that capped 2024. As at the end of March, Cotality (formerly CoreLogic) reported an increase in Sydney home values of 0.4 per cent for the quarter. While minimal, and barely noticeable at the coalface of the market, this growth reversed the downward trend that was in play.

The auction market is always under the microscope and once again it’s SQM Research’s data that remains most accurate. The results reveal a slight uptick in auction energy to start the year and this seemingly peaked just before the first rate cut in February. It was the much-anticipated rate cut that was a long time coming. All the major banks got the forecasting wrong yet again, suggesting rates would be cut aggressively in 2024, and this false narrative had many households prepped and ready to finally get some relief. Sadly, it never arrived in 2024, so the February 2025 rate cut, while late, was certainly welcome. The market really needed the cut too as we could see the pressure on households which have been shouldering the burden of 13 rate increases since 2022 and the explosion in the cost of living.

While many market commentators and economists suggested the rate cut would bolster buyer confidence, improve borrowing power and propel price growth momentum, it hasn’t really turned out that way. As we closed off March, Sydney recorded the weakest auction clearance rate for 2025, coming in at 47.2 per cent from 1,535 auctions. The sugar hit from one rate cut lasted about two weeks and then the ongoing affordability conversations resurfaced. The market behaviour we’ve seen over the past month would suggest we require at least two more cuts for buyer confidence to bounce and property prices to noticeably improve.

We’d suggest the overall market is tilted in favour of buyers. While the media has a vested interest in reporting about the magnificent sales occurring in Sydney each week, we can confidently advise that the vast majority of sellers are in tough negotiations with a shallow buyer pool. Despite the path to securing a sale taking more twists and turns than during a hot market, the prices being achieved remain really solid. We’re holding the benchmarks set in hotter markets, although it feels more stressful getting these outcomes. It’s not an easy market, that’s for sure, but for those committed to selling and willing to listen to market feedback, the journey to being sold is fine.

While we’re always cautious about forecasting the future of the property market, it’s apparent we need further rate cuts before we can see a reliable trend of prices improving. The conjecture about the rate market is just too messy to predict a clear path forward, with the unknown impact of tariffs to wade through and Government energy subsidies to roll off. Fortunately, our employment market remains resilient. It’s expected there will be two more cuts this year but when all the major banks get this space consistently wrong, there’s little faith in their words. So, it comes back to a market where you trade and operate with what’s in play. It’s what seasoned professionals tend to do. Buying conditions are about as good as a Sydney market allows, with plenty of supply and less competition. Why more aren’t taking advantage of this window is questionable, but we’ll see so many jump in following a few more rate cuts. However, by that time the advantages they have now will be lost, competition will increase, prices will edge forward and they will be telling us they should have bought months ago. That’s our take on the market so as we head into winter, pay attention and get clear on your property objectives.