Market Report - New South Wales (August 2008)


NSW as a whole has not performed well in recent months, but pockets of growth can still be found and Sydney investors will be happy with increasing rental yields.

This year has not brought much in the way of good fortune to the NSW property market so far, with the First State registering slow or negative monthly capital growth since the beginning of 2008, according to Residex data.

While this slowdown may be symptomatic of the nationwide property outlook as a whole, following several much-publicised interest rate rises at the beginning of the year, Sydney in particular is suffering more than most state capitals.

Colliers International's March Economic and Property Report names Sydney as the state capital to register the largest decline in capital growth (1.5%) over the first quarter of this year. Residex meanwhile has recorded a 2.03% drop in quarterly growth in the Sydney housing market January and April - putting the April quarterly growth figure at -0.77%.

Units have fared little better according to Residex data, with quarterly growth rates showing a drop of 1.81% between January and April, decreasing from 2.38% down to 0.57%.

The good news for investors who already own property in the state capital, says Andrew Donnelly, CEO of property advisor Braxton Chase, is that Sydney rents are continuing to go "through the roof".

"It's likely this trend will continue for at least the next year, bringing some hope to established investors missing out on capital growth," says Donnelly.

The recent Rent and Sales Report from the NSW Department of Housing, provides support for Donnelly's argument, highlighting annual median rent rises of 9.4% in the Sydney Statistical Division, and 11.1% in NSW as a whole.


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