Inner Sydney units offer good investment prospects

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Investors looking for affordable and high yield properties should consider looking at Sydney's inner city units, according to RP Data.

RP Data research analyst Cameron Kusher said units within 10km of the CBD offer good opportunities because they appear to be significantly undervalued compared to surrounding suburbs. He also believes the areas chosen are likely to experience strong demand in the future. Six of the 10 suburbs selected had a median unit price below the current Sydney median unit value.

"People will need to live somewhere and the inner Sydney area is likely to be particularly desirable, especially for investors and first and second homebuyers looking for a bargain," he said.

His top picks include Darlington, Greenwich, Ultimo, Rushcutters Bay, Potts Point, Forest Lodge, Crows Nest, Lilyfield and Chiswick.

He said the reason most of these areas are still affordable is due to an abundance of older unit stock. The upside to these older units is they tend to be well located, and have larger floor areas. "Many also have significant renovation potential," said Kusher.

With an estimated population of 4.3 million residents in 2007, Sydney's population has been growing by almost 35,000 per annum. Yet it has lagged behind some of Australia's other capital cities, showing the lowest unit median value growth over the last 10 years. The median value of units in Perth is only slightly less than Sydney now, according to RP Data and Residex figures.

However, Kusher said Sydney is set for its own growth spurt now.

"While property values have shown little growth over the last five years, it now appears that Sydney is providing some fantastic buying opportunities," said Kusher. "The gap between property values in Sydney compared to other capital cities has closed significantly when analysed against historical value differentials."

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