While values are still falling, the rate of decline is slowing, meaning all is not lost for investors in Sydney
Dwelling prices continue to go down, but there’s reason to believe this won’t last long.
According to CoreLogic’s Home Value Index for May 2019, property prices across the nation dropped by 0.4% in this period. This is the smallest dip month-on-month since 12 months prior, and reflects the slowing rate of decline seen since the beginning of this year.
“This improvement is primarily being driven by a slower rate of decline in Sydney and Melbourne, where housing values were previously falling at the fastest rate of any capital city. Sydney values were 0.5% lower over the month – the smallest decline in values since March last year,” says CoreLogic head of research Tim Lawless.
He notes that the recovery is evident in Sydney’s auction market as well.
“Although clearance rates remain low relative to several years ago when housing market conditions were much stronger, the improved performance at auction aligns with the easing rate of decline,” Lawless says.
The ripple effect has been observed across the state, as outside of Sydney some of the regional markets are feeling the negativity. CoreLogic’s quarterly Regional Market Update in March 2019 reported that Illawarra had the greatest annual decline in house values at 10.1%. Meanwhile, Newcastle saw the most significant annual fall in unit prices, just above Lake Macquarie’s decline of 9.4%.
Renting in Newcastle and Lake Macquarie has also become more expensive compared to a year ago. For this reason, Port Macquarie is becoming a good option for investors seeking a strong return, particularly as it’s more affordable for those on a budget.
“One of Port Macquarie’s growth factors has always been the affordability of housing. It has typically been at 50–60% of Sydney’s prices – in particular for retirees, they’re able to sell in Sydney and relocate here. Along the way, they will enjoy a nice dividend to enhance their lifestyle,” says Paul Adams, who is behind a National Rental Affordability Scheme development in the region.
“Recently, the university sector has established a footprint here, which means families can move to the region and if their children don’t want to or can’t afford to go away to university, there’s a university presence right here.”
SUBURB TO WATCH
KENDALL:
A stunning riverside suburb in the Port Macquarie region, Kendall is known as the Poet’s Village, as it was named after local poet Henry Kendall.
The suburb saw a strong streak of doubledigit growth in the May 2014–16 period. However, at just $450,000, the median house price attracts buyers looking for affordable housing. And as the home of a National Rental Affordability Scheme (NRAS) development, eligible tenants can also fi nd lodging at very reasonable rates. The increasing university presence also appeals to students, and retirees enjoy the favourable temperate climate.
Kendall’s accessibility has improved over the years, with freeways facilitating easier travel from Sydney.
