Sydney’s median house price hit an all-time high of nearly $1.6 million at the end of 2023, according to Domain:
At the same time, Sydney’s rents are by far the highest in the nation after experiencing explosive growth since the start of the pandemic:
The above represents a ghastly equation for aspiring first home buyers in Sydney, who are paying astronomical rents as they try to save a deposit on homes that are becoming further out of reach.
To add further insult to injury, Sydney first home buyers are facing strong competition from investors, who are gobbling up Sydney’s homes at an increasing rate.
According to a new analysis of Australian Bureau of Statistics (ABS) data from Domain, lending to property investors hit a six-year high as a share of total home lending at the end of 2023. This far outpaced the share of lending going to first home buyers:
At the national level, investors comprised just over 36% of total housing finance commitments in December 2023, up from around 23% in the final months of 2020.
First-home buyers, by comparison, comprised only around 18% of total mortgage commitments in December.
Investors are most active in NSW, which augers badly for prospective Sydney first home buyers.
Investor lending in NSW now makes up over 40% of all housing finance commitments, while first home buyers make up just over 16%:
Investors are likely buoyed by the shortage of rental housing across the nation, which is driving up rents, along with the prospect of interest rate cuts.
The sharp rise in personal income taxes is also likely encouraging higher-income individuals to seek negative gearing opportunities to reduce their tax bills:
So long as the federal government continues to fire hose huge volumes of people into Sydney via net overseas migration, creating an imbalance between supply and demand, then Sydney property will be perceived as a surefire bet.
