Sydney - Affordable & Liveable Property Guide 1st Half 2019
Affordable Suburbs - Sydney
Median property prices in Sydney softened between 2017 to 2018/191, by -5.3% to $1,292,000 for houses and -4.7% to $773,500 for units. Sales transactions softened also, by -4.3% for houses and -9.8% for units over the same period, reflective of the decline in market demand. By comparison, from 2016 to 2017 Sydney’s median house price increased by 10.8% and its median unit price grew by 4.0%, as sale transactions fell by -6.3% for both houses and units. The recent price cooling and reduction in activity is great news for first home buyers, as now presents a more affordable opportunity to enter the market with reduced competition.
key finding in the 2nd Half
2018¥ report was that all identified affordable and liveable
suburbs experienced declining annual median price growth, for both houses and
units. Thus, instead of showcasing suburbs with the highest price growth, which
has been the trend over the past 4-5 years, for the first time it became an
exercise in minimising the decline in capital growth. This is a continued
finding in the 1st Half 2019
report, which brings increasingly good news to first home buyers.
Over the 12 months to Q4 2018, the proportion of income required to meet home loan repayments decreased by 2.9% in New South Wales3 (NSW). This has encouraged buyers to enter the market, with the number of first home buyers increasing 1.7% over the same period. This confirms that there is a continuing return towards a sustainable market.
2 provides the percentage of suburbs in Sydney that are available for house
buyers across various price ranges.
Liveable Suburbs - Sydney
There have been some interesting shifts in the Sydney market, with a clear direction towards more affordability. The price bracket of less than $500,000 continued to grow over the past 12 months, from 0.0% in the 1st Half 2018 µ report to 0.5% in this report. This is admittedly lower than the quoted 1.4% in the 2nd Half 2018¥ report, however it is possible that this is due to stock availability. First home buyers can further rejoice as the $500,000-$800,000 price bracket continues to open, from 0.9% in the 1st Half 2018µ report to 3.1% in this report.
That said, the dominant price point in Sydney remains the $1,000,000-$2,000,000 price bracket, which accounts for 55.5% of sales transactions in this report. Interestingly this is at a higher level than what was recorded in the 1st Half 2018µ report (52.6%) and is on-par with the 1st Half 2017π report (55.3%), suggesting that although there is an increase in affordable options, the market is also remaining resilient. This is good news for current owner occupiers and investors, as they can be confident of sustainable capital growth.
Affordable house suburbs (those with a maximum property sale price of the NSW state average home loan, plus a 160% premium as per the 2nd Half 2018¥ report) still exist. 75 suburbs recorded median house prices in this bracket, which is encouraging news for first home buyers.
Despite this, many of these suburbs fail to meet the liveability criteria set in this report. To achieve this, premiums of 165% for houses and 60% for units needed to be added to the NSW state average home loan. The suburb Panania for houses, and the suburbs Peakhurst and Hurstville for units continued to hold their previous positions as affordable and liveable suburbs from the 2nd Half 2018¥ report. Other previous affordable and liveable suburbs have either failed to meet liveability criteria, or have become unaffordable due to capital growth.
all methodology criteria (property trends, investment, affordability,
development, and liveability), Tables 3 and 4 identify key suburbs that
property watchers should be on the lookout for.
Affordable & Liveable Suburbs - Sydney
Over Q4 2018, Sydney’s rental market recorded median prices of $500 per week4 for houses and $550 per week for units4, representing stability in unit rental price growth and a minor softening in median rental price of -2.0%. These fairly stable rental price growth levels were achieved despite a 3.6% vacancy rate. Average yields of 2.9% for houses and 3.8% for units in December 2018 are also reflective of the movements in median rental prices in the Sydney Metro area. In fact, houses recorded a slight upward trend in the 12 months to December 2018 due to cooling in median property prices. Sydney proves to have a resilient rental market, which is comforting for investors.
The 1st half of 2019 is set to see approximately $4.0B of development commence in Sydney Metro, with a healthy balanced focus on mixed-use, infrastructure, and commercial projects. Key projects include Mount Street Commercial Office Building ($118.4M) and Christie Street Mixed-Use Development “88 by JQZ” ($255.9M) which will add 654 apartments. The redevelopment of Concord Repatriation General Hospital ($341.2M) is an infrastructure project that will construct a 6 storey clinical services building for aged complex care which is also considered key for the period.
This affordable and liveable property guide for Sydney analyses all suburbs in the Greater Sydney area, within a 20km radius of the Sydney CBD. The following criteria were considered:
- Property trends criteria – all suburbs considered have a minimum of 20 transactions for statistical reliability purposes, with positive price growth between 2017 to 2018/191.
- Investment criteria – as of December 2018, all suburbs considered will have an on-par or higher rental yield than Sydney Metro, and an on-par or lower vacancy rate.
- Affordability criteria – all identified suburbs required a median price below a set threshold. This was determined by adding percentage premiums to the NSW average home loan, which was $464,883** as of Q4 2018. Premiums of 165% for houses and 60% for units were added, which were below those required to reach Sydney Metro’s median prices (178% for houses and 66% for units). This places the suburbs below Sydney’s median prices, meaning that the affordable and liveable suburbs identified within this report are more affordable for buyers.
- Development criteria – all suburbs reviewed have a high total estimated value of future project developments for the 1st half of 2019, as well as a higher proportion of commercial and infrastructure projects. This ensures suburbs chosen show signs of sustainable economic growth, which in turn has a positive effect on the property market.
- Liveability criteria – this included ensuring all suburbs assessed 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 state average (as determined by the Department of Jobs and Small Business, December Quarter 2018 release).