Your guide to Sydney’s property market

Your guide to Sydney’s property market

Emma Norris - 1 Jun, 2021

Featuring an idyllic blend of beach and city, Sydney is one of Australia’s most popular cities to buy property.

Whether it’s the historic terraces of Surry Hills, a beachside apartment in the Northern Beaches, or a larger family home in the Western suburbs, there are many great investment opportunities in this urban oasis.

The desirability of the city lifestyle, strong rental returns, and constant demand can make Sydney a great choice for investors and owner-occupiers alike. That said it can be a difficult market to break into – especially for first-time buyers – due to steep prices and negative gearing. Read on for your guide to Sydney’s property market, including where to buy in Sydney.

Fast facts about the Sydney property market

1.   Sydney’s property market prices

Despite seeing a brief downturn in 2020 during COVID-19, Sydney’s property market has recovered stronger than ever. The current median house price hit a record of $1,309,195 in the first quarter of 2021. Rising 8.5 per cent in three months, this was the fastest quarterly growth Sydney had seen since 1993.  The median price of a unit in Sydney is $1,060,000, as of March 2021.

In September 2019, only 5% of Sydney suburbs had a median house value less than $500,000, down from 22% five years ago. Meanwhile, only 29% had a median value of $500,000 or less, compared to 49% five years ago.

2. Sydney’s property market trends

Australia’s property market is on an upward trajectory and shows no sign of slowing down, with experts predicting sale volume will increase by 40 per cent in 2021. Sydney’s property market is seeing high demand, with  realestate.com.au data showing the second-fastest sales rates in the country. Sydney properties are listed for an average of 27 days on the site — sitting just behind Canberra, which had an average of 25 days. While demand continues to soar, prices are following suit — with property values expected to increase by a strong 19% by the end of the year. This is more than the double the initial prediction of 8% back in November 2020.

3. Sydney’s average rental yield

According to data from CoreLogic, Sydney’s current average rental yield in 2021 is 2.7%. This is down from 3.0% the previous year and puts Sydney below the average gross rental yield for capital cities nationwide, of 3.3%. Sydney currently has the lowest rental yield in Australia. This can be attributed to the high vacancy rates that have come about due to reduced migration and a decrease in seasonal workers.

4. Sydney’s capital growth

Sydney has seen some of Australia’s most consistent capital growth over the last four decades. A recent report predicts that Sydney’s property prices will continue to see a strong growth rate of 19 per cent throughout 2021, before slowing to 6 per cent in 2022. Experts predict that while Sydney will continue to see strong demand for houses, particularly in the inner and middle ring suburbs. However, reduced demand for apartments is expected to soften capital growth.

What’s special about Sydney?

Diverse population

It may not be our nation’s capital, but Sydney is the most populated city in Australia. Currently, Sydney’s population is estimated to be around 5.57 million. Around half of its population were born overseas and more than 250 different languages are spoken, making it one of our most multicultural cities.

Sydney’s population is also quite diverse in terms of age, with younger demographics residing largely in city suburbs and older folks in suburban and the outer suburbs. The median age of Sydney residents is 35 years, and households comprised an average of 2.7 members.

Sydney’s changing demographic has had a significant impact on market trends. While a big house in suburbia was once the popular investment choice, the rise of young, single households has made inner-city living more desirable. Meanwhile, due to new transport infrastructure, more families are choosing to purchase homes on the outskirts of Sydney.

Sprawling layout

Sydney is a spread-out city. Extending 70 km to the west, 40 km to the North and 60 km to the South, it has around 650 suburbs in its metropolitan area. In the centre of Sydney, the CBD wraps around the iconic harbour. The business district extends north, all the way to the harbourside North Shore. Venture South and you will reach the suburban ‘shire’ region, while the Western perimeter extends to the foothills of the Blue Mountains.

Impressive infrastructure

When it comes to infrastructure, Sydney is hard to beat. From leading universities to large shopping centres and the world’s largest natural harbour, there’s no shortage of features that make it a desirable place to live. Sydney features a robust transport system, including buses, trains, ferries and the recently launched light rail network. There are also future plans to extend the current rail system, to make the eastern suburbs more accessible. Sydney is also home to Australia’s busiest national airport, just 8 km from the CBD. This handles over 35 million passengers a year, flying to 100 destinations worldwide.

Resilient economy

Sydney has the largest economy in Australia and is known as the economic hub of Asia-Pacific. The city is comprised of various commercial areas spread out through the city – from the CBD to the docks of Botany to the Western Suburbs. What was once essentially known as a manufacturing city has diversified into a hub for professional, knowledge-based jobs in the business and financial service industries.

It’s no secret that Australia’s economy has suffered nationwide as a result of the COVID-19 pandemic, and Sydney is no exception. With 16.1 million tourists visiting Sydney every year, the city was previously generating around 30 billion to the NSW economy annually. With visitor numbers at major tourist attractions slashed by 75 per cent due to closed borders, the impact has been substantial.

However, the city appears to be firmly on the path to recovery. At the heart of this comeback will be the City of Parramatta project, with the Western suburb set to become a second economic hub. Parramatta’s economic growth is anticipated to almost double from 2.4 per cent per annum to 4.6 per cent per annum over the next five years due to infrastructure investments and future developments.

Sydney’s growth

Sydney’s strong manufacturing and tourism market has helped fuel job creation and contribute to the city’s rapid growth. Since the 1970s, Sydney and Melbourne have been neck-in-neck when it comes to the highest population growth, with both cities adding around 1.7 million new residents over 40 years.

Sydney’s population has risen by 123,813 people or around 1.6% just over the last year. This was the highest yearly increase the city had seen since 2017. The introduction of new transport infrastructure, motorways and road expansions is predicted to fuel further population growth, especially in areas further away from the CBD like Parramatta and Liverpool.

Exciting culture

Being such a multicultural city, Sydney has long been known as a vibrant, cultural melting pot. It’s a metropolis for dining, art and culture with far-reaching global influences. In most dining precincts, you can choose from a wide range of dining cuisines, from Greek and Middle-Eastern to Italian and Indonesian.

While Sydney doesn’t quite boast the same vibrant nightlife scene as Melbourne, it more than makes up for it in outdoor attractions. This has served the city well during COVID-19, in light of social distancing restrictions. From grabbing takeaway fish and chips at one of the many beaches to visiting art festivals such as Vivid or Sculptures by the Sea, there are many great ways to socialise outdoors.

Sydney’s thriving cafe scene has also made a strong recovery, due to the swift implementation of safety measures. Check-ins are required via the Service NSW app at all public venues, and tables are spaced 1.5 metres apart. The NSW government has even implemented initiatives to encourage locals to enjoy Sydney’s dining and culture scene, such as Dine and Discover vouchers. Alfresco dining is also on the rise in the city, with many local councils such as Coogee and Darling Harbour expanding their outdoor dining onto areas such as footpaths and public spaces.

FAQs

Here are all your most asked questions, answered!

Best suburbs to live in

With Sydney’s property market being as diverse as its population, it cannot be thought of as one holistic entity. Rather, it can almost be thought of an ecosystem of sub-markets, divided by geographic location and price points.  So, if you’re wondering ‘where is the best place to buy in Sydney?’ there’s no one answer. However, you can check out a guide to some of the more liveable areas to buy in below.

The Eastern Suburbs

Nestled between the harbour and Sydney’s Eastern beaches, you’ll find the East Sydney area. This locale encompasses suburbs like Edgecliff, Rushcutters Bay, Darling Point and Elizabeth Bay. While apartments and terraces in these suburbs tend to be on the smaller side, they offer a great quality of life – including parks with harbour views, quiet neighbourhoods and many great cafes and restaurants within walking distance. This area is a popular choice for young couples.

Further along the coastline, the Eastern beaches of Coogee and Bronte are popular with growing families. While these areas tend to come with a high price tag, they also yield strong rental returns. While not considered quite as trendy, residential suburbs like Kensington and Kingsford give more space and better proximity to the CBD (particularly with the addition of the recent light rail) at lower prices.

The Northern Suburbs

If you’re chasing the ‘Great Australian dream’ of a big house on a block in suburbia, the Upper North Shore is a great option. Encompassing the areas between Roseville and Berowra, this area is known for its leafy streets and large lot sizes. It’s also statistically one of the safest areas in Sydney, making it a popular choice for families.

North of the Harbour Bridge, the Lower North Shore region offers a slice of solitude while still being close to the city. This region includes suburbs like Willoughby, Mosman, North Sydney and Hunter’s Hill. With many of these areas offering waterside views, it’s considered one of the most desirable places in Sydney to live. With a high density of apartments and easy access via motorways and public transport for the CBD, this is an extremely popular area for young professionals.

The Southern Suburbs

For those seeking a quieter lifestyle away from the hustle and bustle of the CBD, the Southern suburbs are a strong option. Travelling along the Western shore of Botany Bay will take you through the suburban areas of Brighton Le Sands and San Souci, all the way to the beachside areas of Gymea and Cronulla.

Located deep in suburbia, Bexley is often regarded as one of the best places to buy in Sydney. With a huge growth rate of 32 per cent according to Domain, it boasts affordable, spacious houses with a strong rental return. One suburb over, Kogarah is also a strong option, thanks to its affordability and great infrastructure.

The Western Suburbs

While once known for being a lower socioeconomic area, Sydney’s Western suburbs are becoming an increasingly popular area to buy property. The lower prices and sprawling lot sizes attract professionals from the CBD or Eastern suburbs who are looking for a larger family home. Improved transport such as the Westconnex tunnel and the growing dining hub of Parramatta has increased the liveability of the area.

Located 16 km South-West of the Sydney CBD, the suburban area of Beverly Hills is a great place to buy and invest — with a predicted year-on-year growth of 25%. Further West, the Blue Mountains area is also one of Sydney’s fastest growing property markets. Many young families are flocking to the area for more space and spectacular views, while still enjoying proximity to the CBD.

Closer to the action, Sydney’s inner-west suburbs are also popular to buy property in, especially for young professionals and families. Marrickville, Ashfield, Summer Hill, Dulwich Hill and Rozelle all feature a mix of older, Federation-era houses and medium density apartment blocks with better affordability that the inner-city Eastern suburbs. Larger homes and proximity to cafes, restaurants and pubs are strong drawcards in this area.

Where is the best place to buy an investment property in Sydney?

As with any investment opportunity, the best places to invest are those with high growth potential, low vacancy and a desirable lifestyle. Research from the Australian Housing and Urban Research Institute has found that apartments in suburbs within 5 to 15 km of the CBD outperform houses in suburban areas in terms of capital growth in Sydney.

 Currently, some of the best investment opportunities in Sydney are established apartments in the Eastern Suburbs (including Coogee, Bronte and Clovelly), the lower North Shore and the Inner-West (such as Annandale, Dulwich Hill and Enmore) These apartments in the inner and middle ring suburbs are being purchased for lower prices than they were a few years ago, making for a promising investment opportunity.

Are property prices going down in Sydney?

While Sydney’s property market took a brief hit June 2019, it has quickly picked up since due to lower interest rates and easier access to credit. Now, Sydney’s property prices have reached an all-time high, and aren’t likely to crash anytime soon.

Is 2021 a good time to buy a house?

The answer to this question depends on your unique financial situation. If you are in a field that is facing continuing uncertainty due to COVID-19 you may find it significantly more challenging to secure a loan to purchase a property in Sydney. However, if you are in a secure job and industry with a large deposit and minimal threat to your livelihood, you may be well-placed to take advantage of Sydney’s booming property market. Prices are only likely to continue to increase well into 2022, so if it’s on your radar, now may be the time to act.

Either way, Sydney is notoriously difficult property market to break into, so using a mortgage broker is recommended. At eChoice, we have some of the top mortgage brokers in Sydney who can help you find the right home loan options for you.

Words by Emma Norris

At eChoice, we have some of the top mortgage brokers in Sydney who can help you find the right home loan options for you during this time of economic uncertainty.

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Looking to buy in Ultimo, NSW 2007.

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Average property price
$1,000,000
Average loan amount
$800,000
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$60,000
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