Market Report New South Wales (February 2008)

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Sydney continues to operate as a multi-tiered market, with real estate in the top end growing in leaps in bounds, while the mortgage belt in Western Sydney continues to stagnate
 
The Sydney real estate market is beginning to heat up, with Residex research showing that property values have increased 2.83% in the three months to October 2007.
 
After a rise in rents in 2007, yields are beginning to stabilise with the median rent rate remaining at $450 per week across metropolitan Sydney. In regional NSW, rents are sitting at $260 per week.
 
Sydney is currently operating as a multi-tiered market, with the top end surging ahead while the mortgage belt in many parts of the western suburbs continues to stagnate.
 
Recent REINSW data shows that mortgage stress suburbs Campbelltown and Fairfield have continued to suffer, with house prices falling a further 0.17% in Campbelltown and 0.15% in Fairfield. The data reveals that turnover has increased in Campbelltown on the back of mortgagee sales and buyers taking advantage of bargain prices.

Highlighting the tier nature of the Sydney market, record real estate prices are being achieved in the east. Over $29m was paid for a Vaucluse property in September, making it Sydney’s most expensive home, and pipping the $28.7m achieved a month earlier for a Point Piper waterfront property.    
 
Andrew Donnelly, CEO of Braxton Chase, believes two-tier market is set to continue, saying that overall, interest rate instability has offset the limited average growth that has recently occurred in Sydney.
 
“Modest growth can be expected in 2008, with more affordable suburbs in the inner west and those undergoing redevelopment in the south outperforming the general market,” Donnelly says.
 
“Recent interest rate rises and the tightening rental market continue to make Sydney attractive to investors, creating a likely situation where investors will play a pivotal role in reviving Sydney’s sleepy market.”

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