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Sydney Property Investment Trends in 2023: Where to Look for Opportunities

CEO Khai Intela
The property market in Sydney is undergoing significant changes, with new opportunities emerging for savvy investors. According to a recently released report from Canstar, Sydney's ranking for property investment potential has fallen, prompting investors to...

The property market in Sydney is undergoing significant changes, with new opportunities emerging for savvy investors. According to a recently released report from Canstar, Sydney's ranking for property investment potential has fallen, prompting investors to explore alternative options within Australia. While lower prices may be a cause for concern, it also presents a chance to find real estate bargains in other cities. Let's delve into the details and identify the areas that are worthy of attention in 2023.

Sydney Units: Affordable and in High Demand

One area that is showing strong buyer demand is the apartment (units) market in Sydney. Median unit prices are currently half that of houses, making it an attractive option for investors. Particularly in the Sydney City, Inner West, and Parramatta LGAs (local government areas), units are gaining traction. Suburbs like Campsie, Liverpool, Marrickville, and Westmead are experiencing significant growth.

For instance, Campsie apartments offer affordable prices compared to nearby houses, with a growing demand from buyers. The median unit price of $620,000 is less than half the median house price, and unit sales outnumber houses four to one. Westmead, with over 300 apartments sold in the past year at a median price of $560,000, showcases low vacancy rates, leading to strong rental yield growth. The Inner West is also a hotspot for affordable units, with Marrickville offering a median house price of $2 million, while units are priced at just $840,000.

Western Sydney: A Region of Tremendous Growth

The Top 10 (Rising Star) suburbs in Sydney reveal the tremendous growth and infrastructure upgrades happening in Western Sydney. Suburbs like Fairfield, Georges Hall, Granville, Jamisontown, Lurnea, and Rooty Hill are experiencing significant development. According to property mentor Roy Halabi, Parramatta, Rydalmere, and Wentworthville are the top-performing suburbs in the Parramatta region. These areas offer stable housing markets, strong rental yields, and promising capital growth.

In addition, Glenmore Park, St Clair, and Claremont Meadows in Western Sydney show great potential. These suburbs benefit from their proximity to the Badgerys Creek Airport, along with massive population growth forecasts and improved transport links.

Sutherland Shire Waterfront Properties: A Hidden Gem

While not highlighted in the Canstar report, suburbs in the Sutherland Shire remain strong contenders for property investment. According to Luke Hayes, the residential project sales director at Knight Frank, the Caringbah peninsula has seen increased activity in suburbs like Port Hacking, Lilli Pilli, and Dolans Bay. These areas boast larger houses with picturesque water and nature views. The waterfront suburbs of Cronulla, Burraneer, and Bundeena offer excellent value, with prime waterfront properties achieving a 121% price premium compared to inland equivalents.

Northern Sydney and CBD Investor Targets

Suburbs north of the CBD present exciting opportunities for investors. Theo Chambers, CEO of Shore Financial, identifies Northbridge, Balgowlah, and Lane Cove as the top performers in 2022. These suburbs provide easy access to the CBD while offering desirable lifestyles for owners. Balgowlah stands out as a great investment opportunity, with high rental yields and projected growth due to planned infrastructure developments. Lane Cove experienced an impressive 37% annual growth in the 12 months leading up to April 2022.

James Pratt, CEO of Auction Group, emphasizes the enduring appeal of blue-ribbon suburbs like Bellevue Hill, Vaucluse, and Bondi Beach. Despite rising interest rates, these premium suburbs continue to attract buyers, especially those in higher price ranges. Pratt recommends keeping an eye on Bondi Beach, which offers the opportunity to Airbnb properties year-round. McMahon's Point is another suburb with limited listings, ensuring a steady stream of buyers even in a downturn. Finally, Mosman remains a popular choice among families seeking houses on the North Shore, with prices that tend to rebound quickly compared to other markets.

Caution Advised as Rates Rise

While there are numerous investment opportunities in Sydney, it is essential to proceed with caution. Tim McKibbon, CEO of the Real Estate Institute of NSW, highlights the impact of rising interest rates on the market. With increased pressure on family budgets due to rising costs of essential expenses like food and fuel, the market may experience downward pressure on prices. McKibbon advises being prepared for potential distressed sales in mid-2023, as fixed-rate periods come to an end.

Despite potential challenges, the market is showing signs of resilience, with buyers returning and vendors accepting market conditions. Recent auction clearance rates exceeding 60% indicate a positive shift in buyer sentiment. However, investors should carefully assess their financial capabilities and consider the impact of rising interest rates before making any investment decisions.

As the property market evolves, opportunities continue to emerge for investors willing to explore new areas and adapt to changing conditions. By staying informed and following the trends in Sydney's property market, investors can make informed decisions in 2023 and beyond.

Rising Stars Report Canstar - Sydney Caption: Rising Stars Report Canstar - Sydney