Desperately seeking affordability in the Sydney market
It might be like looking for a needle in a haystack, but reasonably priced properties can still be found in Sydney. It’s just a matter of finding them before their price climbs.
For people looking to buy a property in Sydney at the moment, the numbers make for scary reading.
According to the latest report from Domain, the Sydney median house price rose to $914,056 during the March quarter. “These prices are causing ur best and brightest to review their housing situation in Sydney,” says REINSW president Malcolm Gunning.
“As a result, many essential services workers including police, firefighters, teachers and nurses can no longer afford to live here,” he says.
The interest rate cut to 2% in May has not made housing affordability any easier. On the contrary, it appears to be doing just the opposite. And with further speculation that the RBA could cut rates further, it is highly unlikely Sydney’s housing prices will fall any time soon, says Linda Phillips, head of research at Propell National Valuers.
“It is widely held that the Sydney market is currently over valued and yet it will increase further by the end of the year,” she says. “However, Sydney has a fundamental shortage of property, with demand in excess of supply, and there are good reasons to see the current price adjustment as an overdue reaction to increasing demand levels.”
She says that concerns of housing affordability and encouraged urban sprawl has forced lower income producing families to venture further from jobs and local business hubs.
Phillips says that it is near impossible to buy anything for just $500,000 in Sydney, but in searching for something with prospects, perhaps looking out into the Illawarra region or the Newcastle
Hunter would offer opportunities.
CoreLogic RP Data recently compiled a report where they discovered that all of the “affordable” middle-ring suburbs for houses in Sydney are either in the Canterbury
or Bankstown council areas.
For houses, these suburbs and their median values include Birrong ($644,349), Chester Hill ($646,328), Sefton ($662,657), Lakemba ($676,479) and Yagoona ($686,338).
For units, these include Lakemba ($362,363), Wiley Park ($366,464), Punchbowl ($388,635), Regents Park ($391,364) and Granville ($400,992). These suburbs are all located west or south-west of the CBD.
However, despite the rising prices, Phillips says that Sydney still looks cheap compared to other large cities, such as Shanghai and Hong Kong.
“Sydney is now regarded as a global gateway city and is in demand from international investors,” she says.
Gunning agrees and adds that foreign investment is creating many jobs in NSW. “Construction is a big employer in NSW and around 47% of new apartments are being purchased by investors,” he says.
“This is providing much needed rental accommodation, and property taxes are financing infrastructure.”
Getting on with it in Sydney’s west
Of the 10 most searched-for areas in Australia through the search tool and map function on realestate.com.au/ invest, five of them are in western Sydney. These include Parramatta
(4), Penrith (6), Auburn (8) and Liverpool (10).
Nathan Sahyoun, principal of LJ Hooker Parramatta, says that a lot of the interest in Sydney’s west has to do with the increasing amount of state government investment in the area.
With the NSW government investing in Sydney’s west, it’s no surprise investors are interested in these areas, he says.
“The increasing living opportunities as well as a growing arts and cultural hub is truly cementing long-term capital growth in the area,” says Sahyoun.
With a second airport planned for Sydney’s west, he suspects that investors will continue to flock to Parramatta for many years.
Rich Harvey of Propertybuyer.com. au agrees that government investment is playing a helpful role, but not just for Sydney’s west, but the capital city as a whole. “Sydney is blessed with a plethora of fantastic projects,” says Harvey. “I feel that Premier Mike Baird is getting on with the job of getting Sydney going. There is a real buzz and things are happening.”
SUBURB TO WATCH
Harris Park: Underrated suburb with bright future
Parramatta may be on the minds of many investors, yet its neighbour Harris Park that also has a bright future. But let’s not kid ourselves. There are some top class amenities in Parramatta which residents of Harris Park love to take advantage of. Namely, the massive Westfield Shopping Centre, which is the fourth largest shopping centre in Australia.
Additionally, Harris Park has all the benefits of the Parramatta CBD, Parramatta Stadium and excellent transport options. The latter is only likely to get better in coming years as new transport infrastructure is put together including the WestConnex and the Badgerys Creek Airport.
In the suburb itself is a little shopping area on Marion St, plus it’s located very close to sought-after schools and universities. It is also a multicultural suburb that’s becoming especially popular with the Indian population.
Demand is already heating up in this suburb, with units typically spending just 28 days on the market, and a healthy vacancy rate of 2.13%, according to Real Estate Investar. The median price of units in Harris Park is also considerably cheaper than neighbours Parramatta ($520,000) and North Parramatta ($508,625).
There are many affordable units on Brisbane St, Alice St and Harris St which are within walking distance of railway stations, the Parramatta CBD and the Westfield Shopping Centre.
Can you afford to buy in this suburb? Find out how much you can borrow