Sydney is likely to close 2019 in a stronger position as it works to reclaim its crown as Australia’s best-performing market
There seems to be nowhere for Sydney to go but up as it regains ground following its recent decline.
The Residential Vacancy Rate Report published by the Real Estate Institute of NSW for August 2019 showed that the state’s rental market had hit its stride again, recording positive results for investors. In the Hunter region, vacancy rates were the lowest they had been in the year, while the rates in inner, middle and outer Sydney were stable for the most part.
“It’s positive to see Sydney’s rental market stabilising following a period of volatility. The early indicators suggest as we move into the warmer months we can expect vacancy rates to fall,” says Tim McKibbin, CEO of the Real Estate Institute of NSW.
“Whether this will translate into the Illawarra or drive even more competition in the Hunter market will be interesting to see.”
The number of construction projects in the pipeline bodes well for infrastructure development throughout the state, with many of these projects being funded by the state government, according to the CoreLogic CHIP (Cordell House Index Price) Report for July 2019.
With such strong indicators on the horizon, confidence in the market is expected to resurge.
“Sydney and Melbourne, due to the big declines experienced in these cities – on average between 7% and 15% during 2019 – are starting to see a return of confidence and will see growth from these newly set lows during 2020,” says Paul Wilson, director of Income2Wealth.
“First home owners will hope this gives them the chance to get back into the market, and upgraders will see this as an opportunity to upgrade while the perceived affordability has come back into the market.”
However, there are investors who remain hesitant to get back into the capital city market. CoreLogic’s CHIP Report noted that off-the-plan apartments in Sydney were recording low valuations, which could become an obstacle for future developments.
“Investors are abandoning the off-the-plan apartment sectors for many reasons, including concerns about construction standards,” warns Metropole Property Strategists national director Kate Forbes.
“Many of those who purchased off the plan a few years ago are now having trouble settling, with valuations coming in on completion at well below contract price at a time when banks are more reluctant to lend on these properties.”
SUBURB TO WATCH
BEXLEY:Property prices plummet in southern Sydney
The house market in the southern Sydney suburb of Bexley continues to track downwards. Values plummeted by 17.6% in the year to August 2019, maintaining a negative trend observed in the last three years, when prices fell by 12.4%.
Athough units performed better than houses, their median price also fell by 4.2% in the past 12 months.
Situated about half an hour from the Sydney CBD, Bexley is a mixed-use suburb, with residential, commercial and industrial developments. Forest Road is its main shopping area and State Transit Authority buses take commuters to and from the city.
Location: Bexley is about a 30-minute drive from the Sydney CBD
Amenities: In Bexley, the main shopping hub is found on Forest Road