Buyer sentiment has dipped, but Sydney remains stable, with the strongest economy in the country
It has been a tough few months for Sydney as the price correction continues to cause prices to fall. In the long term, however, the city is still expected to come out on top.
“In the medium to long term, capital growth is expected to remain robust in Sydney due to strong employment, population growth and a host of major infrastructure projects,” says Rich Harvey, CEO and founder of Propertybuyer.
“NSW has the strongest economy in Australia and is responsible for approximately one third of Australia’s GDP. It also has the lowest unemployment rate at 4.5% and the strongest job growth at 3.4% per annum.”
As a result, Sydney properties should continue to see reasonable demand. While some of the population has shifted to other states due to the high property prices, NSW still has the best net overseas migration figures in the country. The 2018–19 budget for NSW has also set aside $87.2bn to roll out infrastructure projects over the next few years, and these are set to improve accessibility across the state.
“Investors playing the long game would be wise to position themselves for the next leg up now, while competition is softer and there is a wider selection of properties available,” Harvey says.
A wealth of choice for renters
It’s a good time to be renting in the metro, according to the results of a December 2018 vacancy rate survey.
“The rise [in rates] was driven by Middle Sydney, which jumped 1.6 percentage points to 5.1%, and Inner Sydney, which rose 0.5 percentage points to 3.0%. Outer Sydney increased 0.3 percentage points to 3.3%,” says Real Estate Institute of NSW president Leanne Pilkington.
“Our feedback from agents suggests that the market is being flooded with new units.”
This means, however, that older units are more difficult to rent. To boost interest from potential tenants, agents are decreasing rents and offering rent-free periods.
The vacancy rates in metropolitan Sydney increased by 0.2 percentage points to 3.2% in the 12 months to December 2018, but on the flip side, regional NSW recorded a 1.2 percentage point drop in vacancies to 1.5%. With rental supply rising in the city, a fall in Sydney’s rental prices may be imminent.
SUBURB TO WATCH
KOTARA: Sydney downturn affects Newcastle
The suburb of Kotara recorded increases in dwelling values for a long period of time, but recent figures show that Sydney’s slowdown could be affecting this area.
The unit market in particular felt the negativity, with values falling by 6.8% to a median of $437,558 in the year to December 2018. The fall was not quite as significant for houses, at 1.5%.
Kotara benefits from being less than 10km from the Newcastle CBD. Westfield Kotara is the suburb’s shopping hub; it contains a department store, supermarkets, a food court and other shops. Schools include Kotara South Public School and another primary school.
