Inner Sydney and Eastern Suburbs have regained their appeal to homebuyers after a muted start to the year, according to the latest residential report from Herron Todd White.
Some of the suburbs that are showing signs of life include Redfern, Darlinghurst, Pyrmont, and Annandale.
"It appears that the improved affordability and lower interest rates have spurred first-home buyers to enter the market," the report said.
Citing figures from the Australian Bureau of Statistics, the report said first-home buyers comprised the largest proportion of national owner-occupier mortgage activity since early 2012 at 29.8%.
However, investor demand remained restrained. In fact, ABS data showed that the share of investor lending in the overall lending activity decreased from its peak of 43% in 2015 to 26% in August 2019, well below the long-term average of 34%.
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Still, the inner city is benefitting from the overall positive sentiments. Some parts are even getting increased activity due to the near completion of the light rail through Scurry Hills and Centennial Park.
"Generally, the surprise this year has been the resurgence of interest in the inner-city markets. This appears to be largely driven by lower interest rates and post-election confidence," the report said.
Overall, the Herron Todd White report said that Sydney's increased demand was not a surprise given the outcome of the federal election, which erased the uncertainty towards capital gains tax and negative gearing rules.
"It is likely that the market had already factored in these taxation changes, which meant that the election result kick-started a more positive sentiment. Agents anecdotally reported to us that within weeks of the election, their phones were once again ringing hot with renewed interest from both vendors and purchasers," the report said.
Furthermore, other factors were also at play, including the easing of residential mortgage lending and the three rate cuts that boosted the surge in activity in the first-home buyer and upgrader markets.
"This has resulted in a much quicker than anticipated rebound in values in a number of areas, particularly those that experienced larger declines during the downturn," the report said.
However, the unit market continues to be a concern, especially with highly publicised issues surrounding significant building defects and flammable cladding concerns.
"We've seen wide and varied results again this year, another demonstration that it's impossible to accurately describe our nation's residential property sector as a single market," the report said.
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