As one of Australia’s most desirable cities for locals and visitors alike, Sydney combines the pull of golden sandy shores and rich history with a metropolitan lifestyle and all the modern spoils. Its iconic structures, yacht studded harbour, and bustling centre make this a captivating place to call home and, as a result, a hot investment spot. But has the ship sailed on Sydney’s investment potential, or are there still property pockets worthy of pursuit?
It’s still a great place to invest
While the reliability of investing in established and thriving cities is nothing new, Sydney may be Australia’s most expensive capital city, but it’s still seeing strong and steadily rising property prices. The latest Corelogic stats show that Sydney house values grew 25% over the last year. So, what’s driving the Emerald City’s potential?
Investment in infrastructure
From the $5.3 billion investment in the airport, Aerotropolis and surrounding Western Sydney precinct (which is set to deliver 20,000 direct and indirect jobs) through to the Sydney Metro program – the most significant transport project in Australia — and a $2.8 billion dollar investment in Paramatta CBD, New South Wales isn’t shying away from investing in its capital city.
Strong focus on rebuilding the economy
The government has placed significant emphasis on ensuring the NSW economy bounces back from pandemic related struggles, which is having a positive impact. Growth in jobs and vacancies are higher than pre-pandemic levels, and despite the pandemic, NSW is the only state in Australia with a triple-A credit rating. Support has come in the form of a $2.8 billion Economic Recovery Strategy and a $5 billion commitment to WestInvest to build infrastructure and facilities.
Sydney is building on its position as the innovation capital of Australia, with the NSW Government providing a funding package of $48.2 million to kick-start the development of an Innovation and Technology Precinct. Tech giant Atlassian has been confirmed as an initial tenant, bringing its headquarters of over 4,000 employees.
Sydney is on a mission to further promote the city’s liveability as the state works towards net-zero emissions by 2050. The city is currently increasing its recycling capacity and is investing millions of dollars in grants dedicated to encouraging investment in the waste and resource recovery industry.
The education pull
Ranked in the top 10 cities in the world for students based on quality of life, employer activity, affordability and student mix, Sydney draws students both domestically and from abroad to study and get on the job ladder.
Top 7 spots to invest
While you may not get much change from $1 million (with median house prices just under $1.4 million), there are still some pockets of potential within the city of Sydney. According to Canstar’s Rising Stars Australian Property Market Report, this is where you can find them:
1. Bass Hill
Less than 30km from Sydney’s CBD, Bass Hill offers a great location, good infrastructure, and property prices below the $1 million mark. Vacancies sit below 1%, making it a solid rental market, and median house prices (just under $900,000) are rising.
With a steadily increasing price growth rate, Cherrybrook in the Hornsby LGA is attracting families with its idyllic lifestyle, ample amenities, and significant investment in transport links. Low vacancies, strong rentals and an increasing price growth rate make this an investor hot spot.
Bucking the inner city, COVID-driven downward trend, vacancies remain relatively low in Darlinghurst, and sales have experienced a considerable uplift over the last 12 months. With a median house price of over $2 million, it’s not a suburb for the faint-hearted; however, more affordable investment options such as higher-density housing are on offer.
A well-established suburb in Sydney’s outer ring, Jamisontown is experiencing steady demand from buyers and renters. Median house prices have increased 8% in the last quarter and currently sit just under $800,000.
With easy links to the city, solid local schooling options and all the services and amenities that make living and renting easy, Leumeah is a winner for investors and home buyers alike. The current median house price sits at $650,000.
Very much a suburb that’s on the improve; Minto has seen several areas revamped recently, which is leading to rising buyer demand. Vacancies are below 1%, and the median house price is now close to $700,000.
Luring lifestyle buyers looking for affordability and investors looking for solid returns; Miranda has a huge shopping complex, accessible commuter services, excellent schools, and vacancy rates at record lows. The median house price is rising and currently sits around $1.3 million, making it more affordable than neighbouring precincts.
Consider regional NSW
Regional New South Wales may provide a more affordable (and potentially more lucrative) option if Sydney is out of your budget. According to the Canstar Rising Stars report, regional New South Wales takes out the top spot when it comes to prospects for future capital growth (versus Sydney sitting at number four overall, as the highest-ranked capital city). Growth in regional NSW is primarily attributed to the search for more affordable and balanced lifestyles. View the report to find out where you can capitalise on this trend.
Ready to invest?
Before you hit the open home trail, it’s essential to do your homework. This includes getting your finances in order, understanding your budget, and learning the intricacies of the local market. Here’s what you need to consider:
- Explore equity in your existing home – in short, equity is the difference between the market value of your current home and the balance of your mortgage. If you’re in the fortunate position to have built up equity (by paying down your mortgage, through capital gains, or a bit of both), your lender can advise you how much usable equity you have available to invest. While you’ll need to speak to your lender to get a bank valuation on your property, your local First National Real Estate office can provide an indicative market valuation to get the ball rolling.
- Identify your goals and stick with them – while it can be easy to get swept up in the appeal of a potentially lucrative do-up or a home you might like to live in for retirement, keep your end goal in mind. With investment properties, ongoing maintenance, tenant demand, and potential for capital gains need to be considered. Your local First National Real Estate office can provide you with current market rental information to help inform your investment decision.
- Understand the local legal intricacies of sale and purchase – if you’ve purchased a property before, you might think you’re familiar with the process from a legal perspective. However, different states have different intricacies that you need to be aware of. Things like due diligence, vendor statements, and the type of sale (i.e., private treaty versus auction) can all differ, so it pays to get a property professional involved and make sure you’re well versed.
- Understand your obligations as a landlord – if you’re looking to rent your investment property out, you’ll need to be across your rights and responsibilities. This includes things like minimum ventilation, lighting and plumbing and drainage requirements. Fair Trading NSW covers all the details.
If it’s your first time investing, this Guide for First Time Investors is packed with plenty of practical tips, and First National Real Estate is always on hand to share our local knowledge and expertise. And if you’re considering a rental investment, our property managers are a wealth of information regarding potential rental returns.