Sydney’s property market still has good pockets of value despite a few initial hiccups as a result of the COVID-19 pandemic.
While average home values took a slight hit in the middle of the pandemic, propertybuyer CEO and founder Rich Harvey says the market has already started to climb back out of that dip.
“The rate of decline is actually slowing which is positive news for the market,” Harvey says.
While dwelling values in Sydney fell 0.5% in the past month and were down 2.1% in the past quarter, Harvey says that year-on-year they are still up 9.8%. And some individual locations have delivered price growth recently.
Sales volumes initially dropped as vendors held off on listing during the first few months of the pandemic but auction clearance rates in Sydney have started to lift again and are averaging between 60% and 70%.
Harvey says all the data shows that the Sydney market is resilient.
After an initial increase in vacancy rates, when the market was flooded with short-term rental properties looking for long-term tenants at the beginning of the pandemic, vacancies have started to tighten in many areas of Sydney, putting upward pressure on rents.
“Rents are rising and when rents are rising strongly, prices will follow and that’s going to be a driving force in the market,” Harvey says.
Harvey identified five key areas with good growth potential in the Sydney market:
- Sutherland Shire.
Known locally as The Shire, it is affordable by Sydney standards and has a good combination of lifestyle factors including rivers, beaches and national parks.
Many of the suburbs within the Sutherland Shire have tight vacancy rates between 1% and 2%, which is well below Sydney’s average vacancy rate of 3.5%.
Key suburbs such as Engadine, with a median house price of $950,000, are family friendly and have good amenity.
“If you were looking at the equivalent type suburbs on the Northern Beaches, you’d be paying around $1.6 million to about $1.85 million,” Harvey says.
“It’s really one of our No.1 areas. We think that it ticks the right boxes for affordability and lifestyle.”
Long-term growth rates for prices in Sutherland Shire average between 7% and 8% a year.
- Badgery’s Creek precinct.
“One of the biggest infrastructure projects of the decade is the construction of the new airport, which is due to be finished in 2026,” Harvey says.
The delivery of dual runways at the airport and all of the other infrastructure associated with the project will provide major job opportunities – which will drive up property demand from people wanting to live close to their place of work.
Other major infrastructure in the area includes a $5 billion science park and the Penrith health and education precinct.
Harvey says medical and technology jobs attract high incomes which will be reflected in the style of housing people will want to live in.
“That also bodes well for that area,” he says.
Suburbs within the region have experienced average annual growth of between 7% and 8% per year.
- Northern Beaches
“The markets in the Northern Beaches have been performing incredibly well, Harvey says. “I’ve been quite blown away at how resilient some of the prices have been through the pandemic period.”
One of the most sought-after suburbs is Freshwater which according to realestate.com.au is the most sought-after suburb in Sydney. He says it’s a competitive market with “fantastic long-term capital growth”.
“We get a lot of requests from buyers to try and get into that market,” Harvey says.
Frenchs Forest, venue of the new Northern Beaches hospital, is also undergoing a metamorphosis.
“Some of the areas around that hospital will be rezoned in the next 12 months. So, you’ll start seeing slightly higher density. It’s also earmarked as an area for higher economic activity under the Sydney metropolitan plan.”
Median house prices range from $1.6 million up to $3 million on the Northern Beaches.
Harvey says the proposed Northern Beaches tunnel would also make areas like North Narrabeen more accessible in the future, improving travel times and lifting property prices.
- Blacktown Region
Suburbs including Plumpton and Mount Druitt have performed well and have very low vacancy rates of just 0.9% and 1.2 % respectively.
Harvey says Mt Druitt is earmarked for massive infrastructure spending which will increase real estate demand and values.
He says median house prices show that the region is still affordable, including $620,000 in Blacktown, $650,000 in Lalor Park and $780,000 in Quakers Hill.
“The region is popular with first-home buyers because of the price point, it’s family friendly and has good transport connections,” he says.
The region has consistent median price growth of about 8% a year.
- Hills District
With the Norwest Business Park delivering a strong concentration of employment, the Hills District has potential for future price growth.
The median house price in Baulkham Hills is $1.2 million and Bella Vista $1.585 million.
Castle Hill, with its shopping centre being revamped and significant rezoning, also had potential with plans for higher density housing, particularly around areas close to the new train stations.
The population in the Hills District is expected to grow substantially in the next few years.
Harvey advises those looking to invest in the current market to not follow the herd but undertake meaningful property research.
He says a buyers’ agent can help consumers create an investment strategy, based on their individual situations.
“We work on a fixed fee basis. the fees range between 1.5% to 2%, depending on the price point.
“If you can just time the offer right and get all the ducks lined up in a row, there are deals to be had out there.
“I’m not saying you always get a bargain, but sometimes if you know how to move right, if you know how to talk to the agent, you can get an exceptionally good deal.”