Welcome to our comprehensive update on the Sydney residential property market for May 2023. The Australian housing market has been on a rollercoaster ride, with a series of ups and downs that have kept homeowners, buyers, and investors on their toes. However, recent data suggests that we’re seeing a positive shift in the market. This update, sourced from CoreLogic, will delve into the details of these trends, focusing specifically on the Sydney market.

The Sydney housing market, in particular, has been a focal point of interest for many, given its status as Australia’s largest and most dynamic market. Over the past few months, we’ve seen some significant changes in the Sydney market, which have had far-reaching implications for homeowners, buyers, and investors alike. This report will provide a detailed analysis of these changes, offering insights into the current state of the market and what we might expect in the months to come.

May 2023 Sydney Residential Property Update

Sydney Housing Market Update

A Positive Turn in Housing Conditions

Sydney’s housing market has been leading the positive turn in housing conditions. In April, Sydney saw an increase of 1.3 percent in dwelling values. This marked a consistent rise each month since February, indicating a clear shift in the market. This upward trend is a breath of fresh air, especially considering the significant drop we witnessed in the past. From peak to trough, there was a 13.8 percent drop in values. In dollar terms, Sydney home values were down approximately $160,000.

This positive turn is a testament to the resilience of the Sydney market. Despite the challenges faced, the market has shown an impressive ability to bounce back. This resilience is a key characteristic of Sydney’s housing market, and one that continues to attract investors and homeowners alike.

The Impact of Supply and Demand

One of the key factors driving this positive shift is the imbalance between supply and demand. A significant lift in net overseas migration has led to increased demand for housing. However, this demand is running headlong into a lack of housing supply. Many prospective vendors have stayed on the sidelines through the downturn, keeping inventory at below average levels. This has given sellers some leverage at the negotiation table.

This imbalance between supply and demand has created a unique dynamic in the Sydney market. On one hand, the increased demand has put upward pressure on prices. On the other hand, the lack of supply has created a competitive market, where buyers are often competing for a limited number of properties. This dynamic is something that both buyers and sellers need to navigate carefully.

Rental Conditions and Advertised Supply

Rental conditions in Sydney have also remained extremely tight, with the vacancy rate holding at 1.2 percent over the month. This has pushed rents to a new record high. Advertised supply levels held well below average through April, finishing the month nearly 17 percent below the five-year average for this time of the year.

These tight rental conditions have significant implications for both landlords and tenants. For landlords, the high rents and low vacancy rates present an opportunity to secure a steady stream of rental income. For tenants, however, the tight conditions can make it challenging to find affordable rental accommodation.

Outlook for the Australian Housing Market

Key Drivers of the Positive Shift

The shift towards more positive conditions has come about in the absence of the usual factors such as easing monetary policies or loosening credit policies. The key drivers of this positive inflection seem to be the larger than expected rise in net overseas migration, which has created additional demand for housing at a time of extremely tight rental conditions and well below average levels of advertised supply.

This shift is a clear indication of the underlying strength of the Sydney market. Despite the absence of the usual drivers of growth, the market hasmanaged to rebound, thanks to the unexpected rise in net overseas migration and the resulting increase in housing demand. This resilience is a testament to the robustness of the Sydney market and its ability to adapt to changing conditions.

Potential Headwinds

While the bottom of the downturn looks quite convincing, we aren’t expecting housing values to rise materially until interest rates reduce, credit policies ease, or housing-focused stimulus is introduced. The combination of high cost of debt and high level of debt, as well as cost of living pressures, is likely to keep sentiment at below average levels at least until interest rates start to come down.

These potential headwinds are important to consider for anyone involved in the Sydney housing market. While the current trends are positive, these factors could potentially dampen the momentum. It’s crucial for homeowners, buyers, and investors to keep these potential challenges in mind when making decisions about their property investments.

The Impact of the Rapid Rate Hiking Cycle

We’re yet to see the full impact of the rapid rate hiking cycle flow through to household balance sheets. As more borrowers feel the impact of higher interest rates, it’s likely we will see more evidence of distress, including a rise in mortgage arrears, albeit from record lows, and potentially a lift in motivated listings.

The rapid rate hiking cycle has been a significant factor in the recent changes in the Sydney housing market. As the full impact of this cycle becomes apparent, we could see further shifts in the market. This is something that all market participants need to be aware of and prepared for.


The outlook for the Sydney housing market largely rests with the trajectory of interest rates. The timing of a rate cut remains highly uncertain. However, once we see rates coming down, that’s when we could start to see some sustained momentum gather in housing markets. Stay tuned to our updates to keep abreast of all the twists and turns in the housing market.

In conclusion, while the Sydney housing market has faced its share of challenges, the recent trends suggest a positive shift. However, it’s important to remain aware of the potential headwinds and the impact of the rapid rate hiking cycle. As always, we’ll continue to keep you updated on the latest trends and developments in the Sydney housing market.

Data sourced from CoreLogic, Australia’s premier real estate data provider.

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