Affordable & Liveable Property Guide 2nd Half 2021 - Sydney

Overview

Median property prices in Sydney Metro increased by 21.2% for houses to $2,000,000 from Q3 2020 to Q3 2021* and by 9.8% for units to $867,500. Between Q3 2020 – Q3 2021, total sales increased by 9.6% (to 5,359 sales) for houses and by 21.1% (to 9,081 sales) for units. Sydney Metro’s median price growth has occurred amidst increased sales activity, indicating real returns in capital investment and high demand. Property owners can be highly confident in their asset’s ongoing value.

A key finding in this report was that all affordable and liveable suburbs identified apart from Cromer (situated North of the Sydney CBD) were concentrated close together in the south and south-western fringe of Sydney Metro. This continue to be a trend previously noted in the 1st halfµ and 2nd half of 2020ϖ. Peakhurst has continued to feature as an affordable and liveable suburb throughout 2020 and 2021.

Further, Sydney residents must look to outer ring areas (10-20km from Sydney CBD) to be able to access affordable and liveable suburbs. This, in contrast to Brisbane, Melbourne and Hobart, where residents can find an affordable and liveable suburb in the inner (0-5kms from CBD) and middle (5-10kms from CBD) ring areas.

Table 1 highlights the top suburbs in Sydney Metro based on price growth and total estimated value of projects commencing in the 2nd half of 20212.

Access to Market

The dominant proportion of homes sold in Sydney Metro across 2021# were in the premium price bracket of above $2,500,000 (32.0%). On the other hand, units recorded a dominant lower-middle price bracket of $600,000-$800,000 (28.5%). Despite Sydney Metro being known as a premium market, the unit price point sale breakdown suggests a more balanced opportunity for first home buyers.

Figure 1. Hobart Metro Houses Sold by Price Range

Affordable and Liveable Suburbs

To identify affordable and liveable suburbs, premiums of 105% for houses and 15% 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 (183% for houses and 23% 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.

Investment Opportunities

In September 2021, house rental yields in Sydney Metro were recorded at 2.2%. In the 12 months to Q3 2021, the median house rental price increased by 5.1% to $620 per week, further complemented with a decline in average days on the market, of -3.8% (to 25 days). The house rental market has remained resilient throughout lockdowns and COVID-19.

In September 2021, Sydney Metro recorded a vacancy rate of 2.7%, below that of Melbourne Metro (3.5%), but above Brisbane Metro (1.4%). Vacancy rates in Sydney Metro now sit below the Real Estate Institute of Australia’s healthy benchmark of 3.0%, which is a first in the past 3 years. Sydney Metro’s vacancy rate has shown a declining trend since peaking in May 2020 due to COVID-19, indicating higher rental demand and quicker occupancy for investors.

Methodology

This affordable and liveable property guide for Sydney Metro analyses all suburbs within a 20km radius of the 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 2020 to 2021*.
• Investment criteria – as of September 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 $705,658** as of Q2 2021. Premiums of 105% for houses and 15% for units were added, which were below those required to reach Sydney Metro’s median prices (183% for houses and 23% 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 2nd half of 2021, as well as a higher proportion of commercial and infrastructure projects. This ensures the suburbs show signs of sustainable economic growth, and in turn, positively affect 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, June Quarter 2021 release).