Sydney prices continued to rise through June

As the lower supply of new listings has continued to fuel buyer demand, Sydney property prices continued to rise through June. As reported over the past several months, despite the quickly rising cash rate environment, the lower supply of listings has been at such a critical level that buyer demand has remained positive across every price point. This market dynamic caught almost every property commentator by surprise, with Sydney prices rising almost 6% since the end of Summer.

However, the most recent cash rate increase to 4.1% was considered by many financial commentators as the tipping point that could turn the fortunes of Sydney’s positive run of price growth. While the overall June conditions remained largely in favour of sellers, as the month came to a close we started to detect a subtle shift in buyer sentiment. We noticed buyers had become more patient, the FOMO that was apparent in April and May had cooled and buyers were largely sticking to their approved mortgage amount when committing to an offer. There may be some seasonality softening at play but it’s also highly probable that the higher interest rate environment and narrative that rates will continue to rise is starting to bite down on affordability and confidence.

It was welcome news that headline inflation fell further than anticipated in June from 6.8% to 5.6%, however underlying inflation barely moved, highlighting that price pressures on many goods and services remains prescient. Sadly, it appears that despite the better-than-expected headline inflation outcome, it won’t be enough to curb the RBA from lifting the cash rate again in July to 4.35%. That said, from speaking to highly active mortgage brokers during the month, it appears that they are continuing to find good deals for customers looking to refinance, along with new lending. It’s an important time to be testing your bank’s offering as there can be up to a 1% differential in mortgage rate offers.

We’re also starting to see a modest ramp-up in appraisals and if this trend continues we could be looking at a very active Spring selling market when supply and demand tilts back in favour of buyers. While many frustrated buyers will welcome a higher supply of property to inspect, this may place downward pressure on prices if the volumes climb too high, so we’ll be watching how the next month unfolds with appraisals and potential campaign start dates. We remain confident that Winter will continue to be a positive period for sellers as supply continues to be tight but rising rates could flip the narrative quickly, it just depends how high they will go.