Blacktown lies on the edge of the crowded urban area of Sydney. This local government area (LGA) is less densely packed than nearby localities just a few kilometres to the East. Despite being more spacious than inner Sydney, the LGA’s property market did not perform as well as those city centre districts in 2019.
As the map below shows, this phenomenon was not unique to Blacktown. All of the outer suburban districts fared much worse than prestigious central addresses. However, other outer LGAs fared worse than Blacktown.
The map of the areas around Sydney shows that the market for houses in most of the city’s LGAs lost value during 2019 Q3. The Hills Shire, Shire of Hornsby, City of Parramatta, and Cumberland LGAs all had greater price falls than Blacktown at 5.83 percent, 6.77 percent, 6.34 percent, and 6.99 percent respectively. Prices fell in Fairfield, to the south by 4.22 percent, which was not as far as the drop in Blacktown, which was 4.42 percent. The rural localities surrounding Sydney all experienced price falls, but not as much as the ring of the city’s outer suburbs. Only a few areas at the high-priced heart of Sydney managed to escape falls in house values over Q4 2019.
The market for units in Blacktown also fell in value over the past year – by 5.57 percent. This poor performance is duplicated in surrounding districts, with all of the outer suburbs seeing unit prices fall by as much as 8.01 percent.
The market for units in Blacktown and all of its immediate neighbours is very small compared to the number of house sales. In the third quarter of 2019, there were only 14 units sold in the area, compared to 310 houses.
In Blacktown, the median price for houses, at $746,517, is considerably higher than the median price for units at $421,209. However, both property types fell in price by more than 5% during the last year.
A fall of 2.48 percent in rent values for houses should have squeezed the buy-to-let sector. However, that fall was not as deep as the fall in purchase prices for houses in the LGA and so the profitability of rented houses increased slightly by 0.88 percent. The rental value of units in the area rose during the period, bringing profitability back to life after a previous quarter that showed almost 0% yield at all for those who rent out units.
There isn’t much demand for rental properties in Blacktown, with the turnover in rental for both houses and units being considerably lower than the national average. In the sales market, demand for houses is higher than the national average, while demand for units is considerably lower than the average for all LGAs in the country.
The graph below sheds further light on the Blacktown property market. Three and four-bedroom houses are by far the most in-demand property type and size in the LGA. There are far fewer sales of two-bedroom houses than two-bedroom units. Almost all of the five-bedroom properties sold in Blacktown over the last year were houses.
The market for houses in Blacktown is much more important than the unit market. The house rental market has more volume than the sales market. In Q4 of 2019, 310 sales contracts were signed and 2,100 rental agreements were completed in the market for houses.
The graphs below show the long-term view of the house market in Blacktown, both for sales and for rentals. You can see that the sales of houses continued to increase from 2007 up to the end of 2017 – with a couple of slight dips along the way.
Since the beginning of 2017 house sale volumes have fallen and HtAG predicts that this trend will relent a little, but with volumes still much lower than their peaks earlier in the decade. Rising demand caused prices to rise and similarly, falling demand for houses has marched in step with falling median prices. HtAG expects that the small rises in demand in the forthcoming quarters will not drive prices higher.
Rental volumes in Blacktown have been steadily increasing since the beginning of 2017. The value of rents hasn’t increased at the same trajectory as the volume of rentals. However, HtAG forecasts that the next two years will see both volumes and prices increase in the Blacktown rental market.
HtAG’s bedroom-level forecasts are currently using a beta model source, so expect these forecasts to be revised once the model is fine-tuned by our data science team.
Since 2007, house price changes stayed in positive territory until the beginning of 2018. Since that date, prices have continued to fall in Blacktown and HtAG forecasts that this fall will continue until 2020. HtAG predicts that the rate of price falls will slow from a bottom of 6.62 percent at the beginning of 2020. However, prices will still be falling through that year, leading to a negative price change of 4.27 percent in 2021.
The close-up heatmap of the Blacktown LGA shows a mixed picture in terms of market growth. Overall, the LGA showed a fall in the average price as 5.57 percent. However, some areas of Blacktown experienced price growth. The Mount Druitt area experienced price growth of 1.22 percent in Q4 2019. Dean Park, and Parklea also showed small price gains. The highest price growth in the house sales market occurred in Shalvey, which had a 2.48 percent price increase.
The largest price falls occurred in the South-East of the LGA, particularly in Blacktown (5.87 percent), Lalor Park (5.5 percent), and Seven Hills (5.31 percent).
The scatter map below show that the highest value properties are located along the East of the LGA and the lowest prices are found in the Lethbridge Park and Tregear districts.
Both the sales and rental markets in Blacktown are much smaller for units than they are for houses. Within this property type, there are generally about ten times more rentals than sales.
As with the market for houses, both sales volumes and prices for units rose until 2017 Q4 with 74 sales and a median price of $450,000. Since that period, both sales volume and median prices been falling. Unit sales fell sharply during 2018. HtAG estimates that unit sales will increase over the next two years, but at lower median prices.
The rental market has shown a stead rise in volumes since 2007, but erratic rent levels. Median ental prices have increased slightly since the beginning of 2018 from $380 to $390. HtAG predicts that this trend will continue along with an increase in volumes.
The price change graph below shows that, while median prices continued to climb all the way up to 2017-2018 where they reached a peak of 15% annual growth, the rate of increase began to fall in 2015. This rate of change fall continues through 2018 into negative territory. HtAG forecasts that this trend will bottom out in 2020. Median price will continue to fall through 2020, but at a lower rate of change.
The heatmap for unit sales in Blacktown is not as comprehensive as the map for house sales in the LGA because very few areas experienced the completion of unit sales during the period. However, the map below shows that prices for units fell in all reported areas. There were two unit sales in Q4 2019 in the Mount Druitt and they lowered the median price levels in that area by 2.69 percent. Falls in Blacktown and Kellyville Ridge were greater with price growth figures of -5.62 percent and -5.85 percent respectively.
As with the scatter plot for house sales, the graph below, showing unit sale prices shows higher prices in the East of the LGA and lower prices in the West.
Although prices and sales volumes in Inner Sydney are higher than those in the Blacktown LGA, the proximity of the big city makes prices in Blacktown generally higher than most s Australian state capitals.
All of the urban area of Sydney has benefitted from strong demand for property for most of this century. However, a cooling economy and lower demand has seen prices falling since 2018. Those hoping to invest in Blacktown would be advised to wait for the market to bottom out. HtAG analysis show that median price for both houses and units will continue to fall though the forecast period, but at a slowing rate of decline during 2020-2021.
The cheaper areas of the LGA, over to the South-West show a better chance of increasing in price in both the house and unit sales markets. Focus particularly on the Mount Druitt, Bidwill, and Willmot for capital growth.