Sydney Hotspots 2011

The purpose of this Property Watch report is to assess suburbs of Sydney that have the potential to perform over the coming year. Suburbs have been chosen based on current pricing levels, infrastructure, property trends, access to amenity and other factors.

What happened in 2010?
As seen from the map to the right, 132 suburbs recorded at least ten per cent growth over the year, backed by a significant number of transactions. The Hotspots 2010 table shows the suburbs within Sydney that achieved the highest median price growth over the year. The highest growth in the house market occurred in suburbs along the M2 Motorway and in the Inner west, where the suburb of Newtown saw its median house price increase 29 per cent over the year from $662,500 in September 2009 to $857,250 in September 2010. Newtown has experienced a process of gentrification in recent years, attracting young professionals who seek inner city living and close proximity to entertainment and dining venues. The highest priced house sale in Newtown during the year was for a property off of Copeland Avenue transacting for $3,200,000. The Eastern Suburbs and Lower North Shore dominated Sydneys unit market, where the suburb of Rose Bay achieved the highest median unit price growth, increasing 43 per cent in the year to September 2010. The change in median price is associated with the type of market participants; while first home buyers dominated the market in 2009, buying at the lower end of the market, the 2010 market was dominated by second and third home buyers buying at the top end.

Rents
House rental growth outperformed that of unit in the 12 months to September 2010. The Leichhardt LGA topped the rental growth list, experiencing an increase of 18.3 per cent in rental price between September 2009 and 2010. After a strong growth in property prices in 2010 rent prices are expected to stay firm in 2011, returning to the long term rental yield equilibrium.

Hotspot picks for 2011
What is the market going to do in 2011? At this stage, the coming year appears to be one of consolidation for some and strategic positioning for others . The strong capital growth demonstrated in 2010 is not likely to repeat itself, however, buyers now have greater control on the market, and can expect greater flexibility when negotiating on prices. Interest rates are likely to play a pivotal role in the coming year, with a mid year increase tipped to affect price growth on the one hand and housing affordability on the other, while negatively impacting buyers confidence. 2011 may pose a great opportunity to repositioning or investment in well located properties, with potential for capital growth and increase in rental yields. Three key factors assist us in determining the most likely suburbs to experience strong capital growth in 2011. They are:

Population growth , which generally puts pressure on property prices.

Infrastructure and investment to support current and future population increases and development of amenities.

Employment opportunities and diversity which includes proximity to employment nodes or potential job growth.

The top picks for 2011 are well located suburbs that were mostly overlooked during 2010. They are supported by good infrastructure and population growth and in many cases, are within close proximity to suburbs that have been in the top performers list in 2010.