Matt Halse, local expert for New South Wales at Herron Todd White, said investor activity appears to have slowed down substantially in the region, particularly in homogenous medium- and high-density areas such Haymarket, Zetland, and Forest Lodge.

"This is largely driven by declines in rental demand pushing rents lower and therefore reducing overall returns," he said.

In Zetland, for instance, the residential vacancy rate hit a record high in May at 6%, which declined to 5.7% in June. Mascot also recorded a high vacancy rate at 7.4%, according to figures from SQM research.

The decline in rental demand in similar locations is pushing rents down, which ultimately impact sale prices. This, however, creates an opportunity for first-home buyers to break into the market.

Halse said Sydney's Inner Region will always benefit from its proximity to the central business district. He said the infrastructure, the services, and the amenities the region has to offer would be able to attract buyers and investors continuously.

Furthermore, the future Metro West and Metro City & Southwest lines will be able to make suburbs in the region more attractive.

Area

Property Type

State

Median Price

Quarterly Growth

12 month Growth

Weekly Median Advertised Rent

Gross Rental Yield

Country

Houses

NSW

$480,000

1.0%

4.0%

$400

4.3%

Country

Units

NSW

$410,000

0.0%

2.4%

$350

4.3%

Metro

Houses

NSW

$960,000

1.6%

2.2%

$520

2.9%

Metro

Units

NSW

$730,000

1.0%

1.0%

$500

3.7%

Source: CoreLogic, August 2020