While 2022 has been a forgettable year for the Sydney property market, it’s been a different story in Darling Point.
There’s no doubt that the property news headlines have been gloomy. With the RBA announcing seven straight interest rate rises, buyers across the city became more circumspect and prices fell -10.2% between their January peak and 30 October.
The Darling Point apartment market, however, has been more resilient. While prices are slightly down since peaking in July, the median value remains 14.3% higher than 12 months ago, according to realestate.com.au data.
Meanwhile, Domain reveals that the median value of a two-bedroom apartment in Darling Point rose 20% over 2022 to $2.1 million. The median value of a one-bedroom apartment rose by 39.6%, taking it to $1.34 million. The median value of a three-bedroom apartment fell – 8.2% (after growing 70.4% in 2021).
All properties have seen a significant lift in values since the start of the pandemic, and buyers remain well ahead, regardless of any recent declines, as the table below shows.
|Apartment size||Median value||Growth 2022||Growth 2021||Total|
Prestige property sales stay strong
We’re finding that there is still incredible demand in the prestige market and that it is here at the top end that sales have been least affected by the broader slowdown. As a result, we saw several building records, street records and even suburb records set over 2022.
The main reason for this is that the market downturn is being driven by a decline in lending. ABS data shows that the number of new loans fell -18.5% in the year to September 2022, including -8.2% in September alone.
This lack of borrowing doesn’t impact the prestige market as much as the first-home buyer and entry-level property market. The general rule tends to be that the more expensive a property is, the less likely a buyer will rely on finance to purchase it.
In the prestige market, it isn’t usually interest rates that have the main impact on demand. This market segment tends to be more affected by factors such as the general health of the economy and share market, the amount of M&A activity happening, and even the value of the Australian Dollar. With the Dollar weaker than it has been, we saw increased activity from ex-pat buyers over 2022 in the prestige market. Many of these were Australians who live in cities such as New York, Singapore, Hong Kong or London and who want a base back home.
Downsizers remain a force
Downsizers were also out in big numbers over 2022 – and for good reason. More and more people see the value of trading in the family home in the suburbs for the convenience of an apartment, often relatively early in their lives – sometimes even while the kids are in the later years of high school. So, not only has this market segment changed, we’re drawing on a much bigger pool of buyers than we were even 10 years ago. There’s even a new term for some of these buyers: “active resizers”.
On top of this, we also see more Sydney-siders wanting to remain in apartments throughout their lives. As their children grow, they tend to upsize the size of their home rather than move to a house further from the city.
All of these buyers tend to demand more space and often look only for three- or four-bedroom properties. There are simply far too few quality apartments in Sydney to satisfy their demand.
What to expect in 2023
Given its status as one of Sydney’s blue-chip markets, Darling Point has proven incredibly resilient over 2022, despite wider slowdowns. We expect that it will continue to outperform the market in 2023.
At the top of the market, demand remains relatively strong, and supply is low. Elsewhere, we expect greater activity levels once interest rates stabilise and confidence returns. We also anticipate that investors, who have been notably absent from the market over the past couple of years, will begin to return, stimulating the entry level market of one and two bedroom apartments.
After all, in the rental market, vacancy rates are dropping – the Sydney-wide is now just 1.3% – and rents are rising. As a result, SQM Data shows the median yield for apartments in postcode 2027 is now a healthy 5.6%.
We think conditions are set for a good 2023, although we don’t expect the market to heat up to the point where we see prices across the board run away in the same way they did in 2021.
If you’d like to know more about the Darling Point property market, or if you need help buying or selling a home, get in touch.