Saying goodbye to 2024: A recap of extended timeframes and investor impact
One of the most notable trends of 2024 was the lengthening of property transaction timeframes, driven largely by supply constraints that significantly limited purchasing options for many prospective buyers, particularly in competitive segments of the market.
“I saw tenancy agreements as long as 10 or 11 months,” Michelle says, explained, highlighting how investor-owned apartments with long-term tenants created barriers for owner-occupiers and first-home buyers.
Investors played a significant role in the market, with many selling underperforming properties purchased during the 2020-2021 boom. “It wasn’t panic selling,” Michelle clarified.
“Families scrimped and saved in other areas until selling became the only option. With the rising cost of living, holding onto these properties simply became unviable.”
Additionally, building defects in newer apartments created a minefield for buyers. Michelle warned of fire orders, cladding issues, and waterproofing problems that often left young buyers financially strained.
“Strata complexes are borrowing money to take developers to court, and buyers are walking into situations where critical information is being withheld.”
2025 Outlook: Key trends to watch
As 2025 approaches, Michelle predicts several significant trends that will shape the property market:
1. Segmented markets will persist
The divide between A-grade and other properties will remain a defining feature.
“A-grade properties will continue to perform well, but other segments, particularly poorly maintained or underperforming properties, will stagnate,” she said.
This segmentation underscores the importance of quality and location in an increasingly discerning market.
2. Sydney Metro drives regional growth
The ongoing expansion of Sydney’s Metro network is set to transform property values in areas along its future routes, including the inner-south area of Kogarah and south-easth suburb La Perouse.
“Connectivity like this has the potential to transform previously undervalued suburbs,” Michelle
said.
However, she cautioned buyers to be aware of zoning changes that could impact property density and values.
3. Downsizing and the baby boomer effect
Retiring baby boomers will remain a powerful force in the market, particularly with many accessing their superannuation in 2025.
“They’re selling larger homes, downsizing to coastal or regional areas, but also keeping city bolt-holes for their active lifestyles,” she explained.
She said with “boomers potentially holding 50% of the nation’s wealth”, their market influence cannot be underestimated.
4. New builds and strata complex risks
New builds are likely to remain a double-edged sword. While increasing supply is essential, Michelle suggested that agents should warn buyers to approach new developments with caution.
“You pay a premium for being the first to use the kitchen or bathroom, but you’re also often left with high strata fees as complexes build up their funds,” she said.
Additionally, new buildings tend to depreciate quickly and may come with undisclosed defects, leaving buyers vulnerable.
5. Interest rates and buyer activity
Michelle anticipates that any reduction in interest rates will prompt a surge in buyer activity.
“At the end of the day, it’s about affordability,” she said. “If rates go down and fresh listings come to market, we could see clearance rates rise back to the 70% range that Sydney is used to.”
Advice for buyers and agents
For buyers, Michelle emphasises the importance of thorough due diligence. “Many first-home buyers don’t know what they don’t know,” she said. Engaging experts to guide the process can help avoid costly mistakes, particularly in strata purchases.
For agents, preparation is key. “The market is cyclical, but no day is the same,” she noted.
With potential interest rate cuts on the horizon and increased listings expected early in the year, agents need to stay ahead of market dynamics and be ready to act when conditions shift.
A volatile but promising market
Looking back on 2024, Michelle noted the market’s volatility and unique challenges but remains optimistic about 2025.
“The property market has always been cyclical, but the fundamentals remain strong,” she said.
With segmentation, new infrastructure, and changing demographics driving trends, success will depend on understanding the specific dynamics of each property and staying informed about broader market forces.
