Sydney Property Investment

Sydney property investment has historically grown along the pebble-in-the-pond model from the CBD. Of course, there’s some natural geography that prevents truly circular movement, like a great big harbour. The Sydney property market, in general, has been in a monster growth phase in many of its CBD-accessible addresses, but there are tangible signs this is reaching the end of that period in 2017.

Recent changes to interest rates for investment properties, falling auction clearance rates and reports from selling agents that the number of potential buyers at open homes has dropped off, indicate that the strongest capital growth in this cycle is behind us.

Of course, this doesn’t rule out the possibility of staying ahead of the peak. The key is to first recognise where the hot run has already been.

Sydney real estate remains an under-supplied market, plus a property market which has as a benefit the strongest economy in the country, as well as still being strong along lines of mitigation … there’ll always be that demand for bridesmaid suburbs which are on the fringe of higher-priced suburbs.

We’ve seen large increases in the value of properties in Bondi Beach and surrounding suburbs in the past 12 months, particularly for lower- to middle-end houses at $1.5 million to $3 million. The Botany/Mascot area has also seen strong growth in both house and unit prices.

In the inner-west, Concord and Cabarita for houses and higher-end units in the Jackson’s Landing precinct in Pyrmont have been some of the best performers.

In the south, houses in particular have seen strong growth, with suburbs such as Hurstville, Riverwood, Engadine and Illawong all performing strongly. The Padstow/Revesby area has experienced strong growth on the back of a surge in the construction of duplex properties.

To the west, we’ve seen significant growth in the Hills area, with strong economic conditions coupled with the commencement of the North West Rail Link creating a ‘perfect storm’ of market conditions.

Further west, in the Penrith and Blacktown local government areas, there’s been significant growth in the previous 12 months … This area of Sydney has been undervalued for a while now and, in particular, property investors have become aware of this.

Savvy buyers should look for infrastructure and planning-led growth to stay ahead of the game.

The NSW Government has targeted certain areas for urban growth in Sydney including the Parramatta Road corridor, North West Rail Line corridor and other rail line corridors, particularly in inner- and middle-ring locations. Large employment growth centres and around improvement transport links to the future Badgerys Creek Airport precinct are likely to provide a ‘growth wave’ to surrounding localities.

While most parts of Sydney have been through their major growth in this cycle, there are still opportunities.

Bayside suburbs such as Brighton-le-sands, Monterey and Sans Souci look to still have some growth potential, particularly for older style units. Areas on the fringes of metropolitan Sydney to the north, south and west still provide some opportunity for capital growth … In some of these areas, a decent family home on a decent land size can still be purchased for around $600,000. To take advantage of this, Sydney property investors have to be less selective about where they want to live and invest.

Sydney Property Investment Overview 2017

In general, we expect to see a period of stable to mildly increasing prices for the Sydney investment property market. There will still be some opportunities in certain pockets for larger growth, however, we expect rental growth to be the major feature of the Sydney residential market over the next few years.

The heat map shows a band of movement to the west and southwest around 25 to 30 kilometres from the CBD, as well as a cluster of suburbs near St Marys, 45 kilometres from town. To the north there’s also a cluster of good gains 20 to 25 kilometres from the big smoke.

Sydney remains an under-supplied property market, plus a market which has as a benefit the strongest economy in the country, as well as still being strong along lines of mitigation … there’ll always be that demand for bridesmaid suburbs which are on the fringe of higher-priced suburbs.

Interestingly, Parramatta remains untouched by high growth suburbs on the heat map, but was central to growth regions overall.

Parramatta is emerging as Sydney’s second CBD so we may begin to see more activity in suburbs that use its services and facilities.

Over the past three years, areas like Canterbury-Bankstown, The Shire and the northwest have grown because of affordability barriers in central suburbs.

Now we’re into this very flat housing market cycle, because of low growth, low interest rates, low inflation macro economies, the shift from areas of affordability will be less pronounced.

Further information on property investment in Sydney including recommended locations and suburbs is available in our free information pack


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