Anybody interested in the property market may be confused about what is to come.

Many Australians would have expected a strong housing downturn during the COVID-19 pandemic. Instead, generally the market dropped slightly during lockdown however remained strong once the restrictions were lifted. Currently, the Reserve Bank of Australia’s strong strategy is to retreat from a soft COVID approach and raise the cash rate. The RBA is now very much responding to economic forces and the consistent cash rate rises reflect this stance. These increases are likely to have a downward effect on property prices.

We see now the highest rates in the last 10 years; however, although there has been a reported downturn in property prices, this has not been as catastrophic as one might have expected. The market may take time to fully respond to the increases.

Although higher interest rates tend to reduce demand for property and ultimately drive down house prices, there are some other factors that may come into play and ensure that any reduction is tempered. The end of the pandemic has brought some favourable conditions for the market generally. These include the increased demand that will come from stronger employment certainty- as the pandemic eases, so too should the associated labour instability.

Further in the Year to come, a more relaxed migration policy may see an increased population looking to enter the property market- assisting both the rental and buying markets.

Although the market is hard to predict, there are some encouraging economic circumstances that may see the Sydney property market only experience a minor decrease in prices.