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Affordable & Liveable Property Guide 1st Half 2021 - Sydney

Overview

Median property prices in Sydney Metro increased by 3.5% for houses to $1,760,000 from Q1 2020 to Q1 20211, and remained stable for units at $800,000. Across the same period, total sales in Sydney Metro increased by 26.7% (to 4,660 sales) for houses and by 16.1% (to 7,705 sales) for units. Sydney Metro’s median price growth has occurred amidst increased sales activity, giving those looking to transact within Sydney Metro confidence in the local market’s real returns in capital investment.

An estimated $12.4B of development is set to commence across the 1st half of 2021. A focus on infrastructure projects will improve liveability for residents and create jobs in the construction phase, while additional commercial projects are also a positive indicator of future long-term employment. Combined, this will have a positive spill-over effect on the property market.

A key finding in this report was that all affordable and liveable suburbs identified were concentrated in the south and south-western fringe of Sydney Metro. This continues to be a trend, also previously noted in the 1st Half 2020µ and 2nd Half 2020ϖ guides.

Table 1 highlights top suburbs in Sydney Metro, based on price growth and total estimated value of projects commencing in the 1st half of 20212.

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Access to Market

The dominant proportion of homes sold in Sydney Metro across 2020/211, were in the lower-middle price bracket of $1,000,000-$1,500,000 (26.6%). Units also recorded a dominant lower-middle price bracket, of $600,000-$800,000 (32.2%). Despite Sydney Metro being known as a premium market, the unit price point sales breakdown suggests opportunities for first home buyers.

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Affordable & Liveable Suburbs

To identify affordable and liveable suburbs, premiums of 86% for houses and 9% for units were added to the New South Wales (NSW) average home loan, which were below those required to reach Sydney Metro’s median prices (173% for houses and 24% for units). Thus, the chosen suburbs have a median property price that are below Sydney Metro’s median prices, meaning that the suburbs identified within this report are more affordable for buyers.

Considering all methodology criteria (property trends, investment, affordability, development, and liveability), Tables 2 and 3 identify key suburbs that property watchers should be focused on.

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Investment Opportunities

In March 2021, house rental yields in Sydney Metro were recorded at 2.4%. In the 12 months to Q1 2021, the median house rental price remained stable at $700 per week, while average days on the market declined by -25.9% (to 20 days). Overall, the Sydney Metro rental house market has remained surprisingly resilient throughout COVID-19.

In March 2021, Sydney Metro recorded a vacancy rate of 3.5%, below that of Melbourne Metro (4.4%) but above Brisbane Metro (1.5%). Vacancy rates in Sydney Metro sit slightly above the Real Estate Institute of Australia’s healthy benchmark of 3.0%, which was also the case prior to COVID-19. That said, Sydney Metro’s vacancy rate has shown a declining trend since peaking in May 2020, due to COVID-19 offering investors confidence in what is a historically strong market. 

Methodology

    This affordable and liveable property guide for Sydney Metro analyses all suburbs within a 20km radius of Sydney CBD. The following criteria were considered:

  • Property trends criteria – all suburbs have a minimum of 20 sales transactions for statistical reliability purposes. Based on market conditions, suburbs have either positive, or as close as possible to neutral price growth between 2019 to 2020/211.
  • Investment criteria – as of March 2021, suburbs considered will have an on-par or higher rental yield than Sydney Metro, and an on-par or lower vacancy rate.
  • Affordability criteria – identified affordable and liveable suburbs have a median price below a set threshold. This was determined by adding percentage premiums to the NSW average home loan, which was $645,7433 as of Q4 2020. Premiums of 86% for houses and 9% for units were added, which were below those required to reach Sydney Metro’s median prices (173% for houses and 24% for units). This places the chosen suburbs below Sydney’s median prices, meaning that the suburbs identified within this report are more affordable for buyers.
  • Development criteria – suburbs identified must have a high total estimated value of future project development for the 1st half of 20212, as well as a higher proportion of commercial and infrastructure projects. This ensures the suburbs show signs of sustainable economic growth, in turn positively affecting the property market.
  • Liveability criteria – all identified suburbs have low crime rates, availability of amenities within a 5km radius (i.e. schools, green spaces, public transport, shopping centres and health care facilities), and an unemployment rate on-par or lower in comparison to the NSW average (as determined by the Department of Jobs and Small Business, December Quarter 2020 release).

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PRD Affordable and Liveable Property Guides 1st Half 2021 - Sydney