NSW still attracts investor attention as its rate of decline slows and the economy goes from strength to strength
Sydney's property market may not be in its best condition at present, but expectations are still high for Australia’s most recognisable capital city.
“Key indicators show that the state economy is not doing too badly. Having said that, the property market, and particularly the investment sector, appears to be lagging as investors take a wait-and-see approach,” explains Rocket Property Group CEO Ian Hosking-Richards.
“This reticence to take action is exacerbated by continued lending restrictions in the finance sector.”
As Sydney moves through the property cycle, Hosking-Richards believes the market will stay soft for the time being, especially as new supply comes in. The annual rate of decline in Sydney has already hit 10% in the past year, as per CoreLogic’s Home Value Index for April 2019.
Still sought after
In the midst of this, it seems that not even the highly publicised negativity in the property scene has kept Sydney from being on investors’ minds. Real Estate Investar has recorded over 100,000 investment outcomespecific searches for the state.
“At a state level, Real Estate Investar members still believe NSW will provide strong returns in the long run,” says Clint Greaves, director of Real Estate Investar.
The more affordable side of Sydney is flourishing as declines eased up in the April 2019 quarter, especially in the lower quartile of the market, which is more accessible to buyers.
“A number will not be able to afford detached dwellings in inner-middle-ring suburbs. Consequently, there will be rising demand for dwellings that offer a compromise between high amenity location, dwelling size and price,” says Geof Snell, principal property economist at BIS Oxford Economics.
“We are forecasting that the [NSW] market will remain in a situation of undersupply. While growth has been underpinned by strong levels of migration and continued buoyancy in construction, these drivers will ease back and growth is expected to decelerate from the levels seen in 2018.”
Sydney still has the weakest rental market among the capital cities as of April 2019, with rental rates slipping by 3.1% in the past 12 months. Nonetheless, the drop in sales could strengthen returns as more people look to rent rather than buy, which could generate more rental demand.
SUBURB TO WATCH
GLENFIELD:
The suburb of Glenfield has clearly been hit by the Sydney downturn, as dwelling values have fallen considerably in the year to April 2019.
House prices plummeted by 13.2% to below $600,000, while unit prices fell by 9.5% to under $450,000. Vendor discounts are at an average of around 7%, and rental rates are either stagnant or dropping as well. With rental returns also being low, it’s wise to be cautious in this market.
The local railway station is a major interchange for southwest Sydney, making Glenfi eld a convenient suburb for professionals. The M5 and Hume Highway are on its western boundary as well. There are also several schools in the suburb.
Accessibility: The Glenfield railway station is an interchange terminal, and the suburb is bordered by highways
Education: There are a number of schools in Glenfield for families with children
