Buyers’ expectations fall $500k short of reality,
Hopeful homebuyers in inner-city Sydney are setting their expectations nearly $500,000 lower than the reality of asking prices.
A new analysis from Domain reveals that buyers seeking homes in the city’s closest postcodes are $450,000 below listings.
For townhouses near the city center, the gap between buyer expectations and seller asking prices is around $200,000.
When it comes to units close to the CBD, buyers’ expectations fall short by approximately $50,000, creating another disparity.
The degree of misalignment also varies with distance, as shown in Domain’s “Matching Demand: Exploring Buyer Preferences vs. Market Supply” report.
This study compares buyer search prices with actual listing prices, revealing the gap between what buyers want and can afford.
Domain’s research team analyzed the prices that buyers enter in their searches compared to the actual property values across Sydney suburbs.
Townhouses, which have widespread appeal, are often in high demand, with buyers frequently willing to pay above asking prices.
This is evident in the search habits of buyers on Domain, where they look for townhouses priced higher than listings.
Interestingly, buyers searching for townhouses at considerable distances from the city tend to set higher price expectations.
For house buyers, price expectations and reality start to align more closely when searching around 40km from the CBD.
However, the research shows that there are no suburbs where buyers’ search prices meet or exceed listing prices for houses.
For townhouses, buyers’ expectations rise above listing prices within 20km of the city, indicating a significant shift in pricing.
Meanwhile, for apartments, this phenomenon appears when buyers are searching just 10km from the city center.
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The further buyers search, the more their price expectations align with property values.
Demand plays a key role in the gap between what buyers expect to pay and what the market dictates.
Domain’s chief of research and economics, Dr. Nicola Powell, explains that this issue is particularly pronounced in areas with limited property sales.
In these areas, demand often exceeds supply, especially near the CBD and along the coastline, where this discrepancy is most noticeable.
“The main goal was to determine if there’s a gap between what buyers are willing to pay and what’s available,” Dr. Powell says.
She adds, “Additionally, we sought to understand how this gap changes depending on the distance from the CBD.”
“What’s really interesting is that, for houses, there is no distance where search prices match or exceed the listing price,” Dr. Powell explains.
She adds, “In a market like Sydney, this clearly highlights the affordability barriers buyers face, as their budgets may not align with listings.”
“At about 40 kilometers from the city, the gap narrows, with only a $10,000 difference between search prices and listings.”
However, Dr. Powell points out, “This mismatch becomes more pronounced as you move closer to the CBD, regardless of the property type.”
According to Domain’s September 2024 House Price Report, the median house price in Sydney stands at $1,654,668.
Sydney remains Australia’s most expensive city, far surpassing Canberra, where the median house price is $1,081,227.
