Consumer confidence drives Sydney’s growth
Growth and consumer confidence are just two of the factors supporting Sydney’s excellent performance
In the first half of 2016, Sydney’s property growth stabilised back to a sustainable level, supported by the state’s strong economy. Sydney has the lowest capital-city vacancy rate in Australia at 1.7%, and its rental market reported the highest median rent for three-bedroom houses when compared to the other major cities.
PRDNationwide’s research shows that NSW’s population has risen by 1.4% since June 2014, in spite of a decline in net interstate migration. This has heightened the demand for properties.
Over the same period, NSW was the only state to report an increase in the ‘time to buy a dwelling’ sentiment index, alleviating concerns that the property market may be declining.
“Growth has been recorded in the Sydney housing and rental markets, along with encouraging signs in regional areas,” the report indicates.
Indeed, the regional market was a standout performer, and market analyst Eliza Owen of OnTheHouse.com.au has highlighted the strength of the NSW countryside over the May quarter. This is ascribed to buyers favouring more affordable pockets of the state.
Confidence is key
Although Sydney property price growth has levelled off from those highs achieved in 2015, a number of factors continue to support property market growth.
“Consumer confidence climbed in May 2016, the highest since January 2014. This has flow-on effects for the property market, with buyers more willing to borrow capital,” says Diaswati Mardiasmo, PRDNationwide national research manager.
Mortgage holders’ confidence has been further boosted by a 3% increase in home loan affordability in the past 12 months, leading to a low interest rate environment that enhances cash flow for mortgage households.
The RBA Commodity Price Index also reported stable results for 2016 as agricultural commodities rose in value, adding to the confidence of regional buyers.
Investor activity slows
PRDNationwide chairman and managing director Tony Brasier notes that owner-occupiers made their presence felt in the six months prior to April 2016 by contributing over $100bn to dwelling finance, indicating a 6.8% increase in their participation. Meanwhile, the percentage of investor housing commitments in April 2016 dropped by 11.6% compared to the number recorded six months previously.
“This is good news for buyers planning to live in their property as they are facing less competition from investors,” he says.
Another opportunity arising for NSW buyers is the large amount of development land being released in Sydney and its outlying suburbs. While the average vendor discount remains low for both houses and units, it has increased since the past year, implying that buyers have increased their negotiation leverage.
The increase in discounts is attributed to the fact that homes are spending more days on market now than 12 months previously, according to CoreLogic research.
Although capital gains are expected to slow down, price growth has been steady due to the supply and demand situation in the metro, according to Herron Todd White’s Month in Review
report for July 2016.
For instance, the area around Port Macquarie
continues to be popular, as it is home to Charles Sturt University. Newly built properties designed for student accommodation have been springing up, although this additional supply may stunt rental growth in the near term.
SUBURB TO WATCH
Port Macquarie: Koala paradise climbs in the market
Situated right on the mid north coast of NSW, the seaside suburb of Port Macquarie is the place to be for those who want to live along the beach while enjoying excellent amenities. Houses are very affordable at a median price of $487,000, and its 10% growth over the past 12 months makes Port Macquarie a great example of a standout regional performer.
The area is known for a koala population and is the location of the Billabong Koala Park as well as a koala hospital. Thus it is a thriving tourism destination. The industry is supported by shopping centres, speciality shops and an arts and entertainment centre. In addition, the local marina and coastal walkway maximise the appeal of the suburb’s location and allow for activities like fishing. Families have their pick of various nearby public and private schools as well.
Port Macquarie is served by buses running to Wauchope, where the closest railway station is located. The local airport also offers flights to capitals like Sydney and Brisbane.
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