With the market starting to get back on track, Sydney is recovering its top spot for buying premium residential properties in Australia
Following a period of decline, the national property market seems to be regaining ground as the slowdown in Sydney and Melbourne begins to abate.
According to CoreLogic’s Home Value Index for July 2019, Sydney’s prices have been trending upwards for two months – a positive sign that has had spillover effects on the rest of the country. Furthermore, even with the recent drops in prices, this capital’s million-dollar market continues to make up a sizeable chunk of sales, with 30.2% and 16.4% of all house and units sales, respectively, being worth at least $1m.
This has allowed Sydney to reaffirm its status as Australia’s number one prime residential market in the Knight Frank Prime Global Cities Index for Q2 2019, above Brisbane, Melbourne, the Gold Coast and Perth.
“The Sydney prime market remains resilient at a healthy 2.5% growth per annum, being the best prestige performer in Australasia,” says Michelle Ciesielski, head of residential research at Knight Frank.
“Prime property performance in Sydney is now in the sixth year of positive annual growth, averaging a remarkable 8.7% growth over this time. This outstrips the average of 1.8% recorded in the six years prior.”
Throughout the period of decline, units have also stood out, even outstripping houses. CoreLogic head of research Tim Lawless points out that, “despite an unprecedented amount of new apartment stock entering the market, Sydney and Melbourne unit values have consistently outperformed the detached housing sector through the downturn, and this trend is continuing into the recovery phase”.
In addition, what the downturn may have also shown investors is that a strict focus on capital growth may not always pay off, as Real Estate Investar CEO Clint Greaves has observed based on recent search trends.
“An interesting trend that we have seen at Real Estate Investar is the focus on higher cash flow and equity or added-value property investment opportunities – there has been an increased focus on high-yield and positive cash flow properties by investors,” he says.
“This is likely to be driven by the fact that investors cannot rely on capital growth to generate returns in the current market, along with the need to meet increasingly strict bank servicing criteria.”
This new direction makes regional NSW suburbs viable investment opportunities, as many of them offer high rental returns at reasonable prices.
SUBURB TO WATCH
QUEANBEYAN:Low-priced alternative to Canberra
Located right on the border between NSW and Canberra, the suburb of Queanbeyan has recently been the place to move to for many Canberrans who have been priced out of the country’s capital.
Property values have been on the rise since 2014, and unit prices increased by 7% in the 12 months to July 2019. Even then, houses and units remain quite affordable, at median prices of under $500,000 and $300,000, respectively.
Rental demand for both types of properties has risen, leading to rent increases of 5% for houses and nearly 10% for units. With the market sustaining yields of 4.7–5.5%, this is certainly looking like a good market to invest in.
Location: Queanbeyan is situated on the border between NSW and the ACT
Affordability: Median house and unit values come in at under $500,000