The Sydney and Regional NSW markets are prime examples of why it pays not to generalise about real estate markets in Australia.
Generalisation and trivialisation by media is one of the chief causes of misinformation about our housing markets.
Sydney is usually discussed in media as a single market, as is Regional NSW, despite the size and diversity within those market jurisdictions.
According to the worst of the trivialisers, CoreLogic Sydney house prices fell 13% in 2022 and therefore all markets across Sydney are in decline.
But that kind of assessment glosses over the reality that there are markets within markets and some sectors of Greater Sydney are still performing strongly.
I would also point out that other reputable sources of price data, such as PropTrack and SQM Research, have far more positive figures on the situation with Sydney markets.
It’s equally true for Regional NSW. CoreLogic claims prices dropped a little in 2022 but PropTrack records a small rise in Regional NSW prices in the past 12 months.
It’s certainly true that high-profile markets like Byron Bay came off the boil, but within the very large state of NSW there are markets which are pumping strongly.
To be successful with property investment, you need to look beyond media generalisation and trivialisation, and see the real story of the markets within markets.
The Regional NSW market is highly segmented, with key markets still bubbling but some of the iconic former boom locations now in decline – notably, Byron Bay, the Central Coast and the Southern Highlands.
The markets showing strong resistance to downturn pressures are led by major regional cities like Newcastle and Wollongong, while a series of smaller regional centres continue to show strength.
Wollongong and nearby municipalities Shellharbour and Shoalhaven are at the top of the list of markets still performing strongly.
Of the 15 Wollongong suburbs included in our analysis, 9 are rising markets and 3 are consistency locations. Of the 9 Shellharbour locations, 6 are rising markets and 2 are consistency markets.
Newcastle and the Hunter Region are also showing strong resistance to downturn pressures: 12 of the 22 Newcastle suburbs in our analysis are rising or consistency markets.
Neighbouring Lake Macquarie remains a solid market and the Hunter Valley municipalities nearby also have growth locations: Muswellbrook is a rising market, while the Maitland and Cessnock LGAs have some good performers.
The other standout regional city is Tamworth, where 5 of the 7 suburbs in our analysis are rising or consistency markets.
Other key cities showing resilience against the economic disruption include Wagga Wagga and Queanbeyan on the fringe of Canberra.
Many of the smaller regional centres across NSW still have busy market activity, including Broken Hill, Blayney, Casino, Cooma, Cootamundra, Evans Head, Inverell, Leeton, Moree and Moama. Broken Hill sales levels are double where they were 18 months ago.
Turning to the Sydney market, Sydney’s partial recovery from its market trough is continuing, with a small rise in the number of suburbs classified as rising or consistency markets.
The bottom of the Sydney downturn occurred in the March 2022 Quarter, when there was a dramatic fall-off in sales activity compared to 2021.
The June 2022 Quarter showed a small but significant uplift and the September Quarter had a further small improvement overall.
The key factors are these:-
- the Greater Sydney boom peaked in mid-2021,
- then Sydney fell gradually in the second half of 2021 while remaining buoyant,
- then Sydney market slumped markedly in early 2022.
This means the Sydney market declined before interest rates rose – and is now fighting back through this period of interest rate rises.
This latest survey of sales activity shows some distinct patterns and trends in the Greater Sydney market.
The first is that the Greater Sydney market is greatly segmented, more so than at any point in the past three years. The 350 suburbs included in our analysis include 100 rising, 52 consistency, 167 plateau and 31 declining suburbs.
The rising markets are mostly those that offer a degree of affordability in an expensive city. That includes some outer ring areas, some middle market precincts and suburbs where apartments offer good value for money relative to houses in the same area.
The declining locations are primarily expensive places, including outer-ring suburbs that don’t offer reasonable affordability. Suburbs in the Blacktown, Camden, Campbelltown, Liverpool and Hills Shire municipalities with median house prices well above $1 million feature prominently among the locations classified as declining markets.
But those same LGAs include rising markets and overwhelmingly these are suburbs with median house prices below $1 million.
Affordability is relative and it’s notable that some of strongest parts of the Sydney market are middle-market areas with house prices in the range from $1 million to $1.5 million, and apartments well under $1 million.
Increasingly there is demand for apartments in these locations, as well as inner-city areas such as the Inner West and Sydney City municipalities.
The Canterbury-Bankstown LGA is the standout market. Of the 23 suburbs in our analysis, 17 are rising or consistency markets.
The most stark areas of decline in the Greater Sydney market are the Top End areas. The municipalities of Woollahra, Randwick, Mosman and Waverley combined have just one rising market but 19 suburbs classified as plateau or declining locations.
The Northern Beaches, previously a standout leader of the Sydney boom in 2020/2021 is now a highly segmented market: the 24 suburbs in our analysis include 4 rising and 5 consistency, but 12 plateau and 3 declining.
And that, in essence, is the story of the Greater Sydney area.
It is not one market and the price data published by publicity seekers like CoreLogic does not adequately depict the many different scenarios playing out across this huge city.