Sydney is still underperforming in the national market, but is buoyed by its employment opportunities and infrastructure
Things continue to look rocky for Sydney, which now features on the poor property performers’ list on a fairly regular basis.
CoreLogic’s Hedonic Home Value Index for March 2019 indicates that Sydney’s subregions are the weakest among the capital cities. Premium pockets are suffering considerable declines as buyers seek out the cheaper end of the market.
“The stronger conditions across the more affordable properties can be explained by the surge in first-home buyer activity in these cities, as these buyers take advantage of stamp duty concessions available in NSW and Victoria,” explains CoreLogic head of research Tim Lawless.
“Lenders are also likely reducing their exposure to borrowers with high debt levels relative to their incomes, which could be skewing demand towards the middle to lower end of the housing market in the most expensive cities.”
For Lawless, what’s happening in Sydney is a clear sign of the ripple effect of tight lending criteria across Australia.
“The fact that we are seeing weakening housing market conditions across regions where home values were previously rising at a sustainable pace and economic conditions are relatively healthy is a sign that tighter credit conditions are having a broad dampening effect on buyer activity.”
Projects bolster potential
The good news is that strong economic conditions are preventing a truly significant downturn by maintaining demand. Infrastructure spending is also boosting appeal in areas like Bankstown, where the completion of the Bankstown Airport redevelopment will create 2,000 jobs. Roadworks are also upping interest in other regions of NSW.
“Gymea in the Sutherland Shire and North Richmond in the northwest will also show continued growth due to affordable entry points compared to surrounding areas, and due to major transport upgrades such as the F7 extension and the Outer Sydney Orbital Ring Road, respectively,” says Propertybuyer CEO Rich Harvey.
However, Harvey warns buyers to be careful to avoid properties that may be adversely affected by the new development.
“Caution must be taken because properties too close to the upgraded roads can be negatively affected. Other possible negative side effects include obscured views and increased traffic, noise and pollution from increased development.”
SUBURB TO WATCH
BERMAGUI: Units flourish in tourist hub
A picturesque suburb tucked under the shadow of Dromedary Mountain, Bermagui has a remarkable unit market that’s certainly worth a look.
Price increases have been in the double digits since February 2014, and despite rising by 24% in the past year, the median value is still only just over $350,000. A mix of affordability, growth potential and reasonable rental returns (4.4% as of December 2018) makes this suburb ripe for investment.
Bermagui is regarded as the northern entrance to NSW’s Sapphire Coast. It is well known for deep sea, game and estuary fishing. Nearby Wallaga Lake attracts those who are into watersports, while the beaches draw surfers and swimmers.
Tourism: Bermagui is close to beaches and a lake, which both bring in visitors from all over
Growth: The suburb’s unit market has been recording impressive growth since 2014
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