The slowdown of the Sydney property market is a long time coming, as house prices near the CBD now exceed $1m
With the median dwelling price in suburbs near Sydney shooting past $1.3m, the easing of property values in the metro is a welcome occurrence.
It is already nigh on impossible to find a house priced below $1m less than 25km from the CBD. This high market entry price prevents the discounts on stamp duty for first home buyers (for properties up to $800,000) from facilitating growth as they normally do.
“The mid-year APRA-induced lending changes resulted in a large slowdown for investment lending,” says Jane Slack-Smith, director of Investors Choice Mortgages.
“Combining this with tougher servicing calculators, reducing the ability to tap into any equity growth, higher interest rates for investors and even higher for interest-only loans and low rental yields, then Sydney should continue to see an easing of price growth.”
Homebuyers should theoretically have an easier time getting a foot in the door of the market once investors back off due to these tightened policies. However, Slack-Smith believes owner-occupiers could have just as difficult a time getting a loan from the bank.
“I have doubts that the Sydney market will do little more than limp along for a few years. However, all the indications are that APRA has finished its lending restrictions, having successfully slowed the markets, and the time to the next growth cycle will be shorter, so not long to wait.”
In the meantime, Newcastle, Central Coast and Wollongong are becoming growth corridors in regional NSW. With the improved access via light rail to Sydney, investors are staking a claim in these parts.
Amenities drive interest beyond the metro
The inner city of Sydney is the top draw for buyers, but the affordability of properties and availability of high-quality amenities are also pushing the apartment market forward in the Northern Beaches and eastern regions.
“Decentralised apartment living options are more common in Sydney historically than in other states, perhaps due to the high-quality amenities that extend beyond the CBD and inner suburbs, such as harbour-side living, the
Northern Beaches, and the Eastern Suburbs’ proximity to the CBD and beaches,” comments Matt Lewison, director at OpenCorp.
A consistent shortage of housing contributes to keeping demand high as the population increases. Investors can therefore still make money off low-rise suburban apartments near activity centres. If developers look into constructing larger units that cater to family occupation, this could boost the market even further.
SUBURB TO WATCH
TEA GARDENS: Riverside suburb continues positive flow
On the mid-north coast of NSW, Tea Gardens is in a beautiful spot right on the Myall River, and is known for its oysters, water activities and dolphin watching.
Dwelling values have increased by more than 10% in this suburb. The median house price has passed the $520,000 mark, while the unit price is just under $400,000. Even then, investors can gain acceptable returns.
Tea Gardens is ideal for those who love nature. Its beauty has been showcased by local artists whose works hang in the local gallery. Fishing and boating are activities of choice, and kayaking is so popular that the yearly Myall River Festival celebrates exploring the river this way.
Culture: There are many markets and festivals here throughout the year
Nature: Tea Gardens is known for its natural attractions due to its location on the river
