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Sydney Real Estate Market & House Prices

Sydney property market is constantly growing, making it an ideal place for property investment. The population is constantly on the rise and with it, the demand for housing. The city centre is always buzzing and there are plenty of job opportunities. But what about the cost of living?

It can be a little expensive to live in Sydney, but when it comes to property investment, the city offers some of the best capital growth returns in the country.

What’s more, Sydney is predicted to experience above average population growth in the foreseeable future. This means that demand for housing will continue to rise, driving up prices and making Sydney one of the hottest property markets in Australia.

If you’re thinking of investing in Sydney property, it’s important to do your research first. Look at the areas that are projecting the most growth and invest in properties that are likely to appreciate in value.

It’s also important to note that not all areas in Sydney are equal. There are real estate markets within the broader market.

Sydney Real Estate Market

The Sydney real estate market is one of the most expensive in the world. The typical house price in Sydney is more than 1.5 million Australian dollars, and the typical price for units is more than 1 million Australian dollars.

Despite the high prices, demand for Sydney property remains high. This is partly because Sydney is such a desirable city to live in. It is located on Australia’s east coast, close to some of the country’s most beautiful beaches. Sydney is also a major financial centre and has a lively nightlife and cultural scene.

The Sydney real estate market is driven by strong economic fundamentals. The city’s population is growing rapidly, and there is limited supply of developable land. This has pushed prices higher, and it is unlikely that the market will show signs of major downtrend in the near future.

If you are thinking of buying property in Sydney, it is important to do your research. The market is very competitive, and you will need to be prepared to make a significant investment. It is also important to be aware of the risks associated with investing in Sydney real estate. Property prices can go up and down, and there is always the possibility of a housing market correction.

The heatmap above visualises yearly house price changes in Sydney. The heatmap is shaded from lighter blue (indicating lower growth) to darker blue (indicating higher growth).

One way to gain a more thorough understanding of which areas may have a lower risk is by toggling the “Lower Risk” view of the heatmap. This view shades areas with a lower risk score more prominently for a clearer visualization of the data. Learn more about HtAG’s property market risk criterion here.

Unlock powerful features such as suburb-level heatmaps, capital growth, and cashflow rankings of areas when you sign up on the Professional Plan.

Snapshot of Key Metrics & Market Comparison Table

We start with a snapshot of the Sydney market that provides an overview of key real estate metrics. The data in this snapshot illustrates typical price, median rent and gross yield metrics for the territory.

Use the Houses/Units toggle buttons below to view the market snapshot for different property types in Sydney. Houses are free standing houses (excl. townhouses and villas). Units are apartments, studios, flats, units (excl. unit blocks).

Buy 

2BR

3BR

4BR

5BR

Rent 

2BR

3BR

4BR

5BR

Yield 

2BR

3BR

4BR

5BR

Buy 

1BR

2BR

3BR

Rent 

1BR

2BR

3BR

Yield 

1BR

2BR

3BR

You are able to drill down to LGA-level data and charts which visualise these 3 key metrics as well as other important indicators in the table that follows.

Enable additional columns in the table by clicking on the buttons underneath it. Toggle between LGA and Suburb views in the table’s navigation bar. The data in the table represents key real estate metrics as of the current quarter and is updated on a monthly basis i.e. 3 times per quarter.

Clicking on an LGA or Suburb links in the table will take you to the relevant LGA page where you can drill-down to the next level of data.

Sydney House Prices

Sydney house prices are among the highest in the world. High house prices are partly due to the city’s limited supply of land. Sydney is Australia’s most densely populated city, with a population of 5.1 million people.

Investors are a major factor contributing to Sydney’s high house prices. A large number of Sydney’s houses are bought by investors, who are often willing to pay more for a property than owner-occupiers.

The rise in Sydney house prices has been particularly pronounced in the inner-city suburbs, where a typical house now costs more than $2 million. This has led to fears that low- and middle-income earners are being priced out of the city.

Many experts believe that Sydney’s house prices are still affordable, compared to other global cities such as London and New York. However, there is a growing concern that the rise in prices is becoming unsustainable.

The interactive chart below shows typical price for both houses and units as well as the sales volume per quarter. Toggle additional views of prices per number of bedrooms by clicking on BR2, BR3 etc underneath the graph. You can also drill down to LGA charts using the dropdown in the chart navigation bar.

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The high house prices in Sydney are causing some people to relocate to other parts of Australia. For example house prices in Melbourne are much lower than the median price in Sydney, and many people are choosing to move to Melbourne in order to purchase a house at a lower price.

Whatever happens, it is clear that Sydney’s house prices are not going to come down any time soon. If you are thinking of buying a house in Sydney, you will need to be prepared to pay a lot of money. However, if you are lucky enough to already own a house in Sydney, you can be sure that your investment is going to continue to grow in value.

Sydney Rental Prices

The high house prices in Sydney are also causing some people to delay purchasing a house. Many people are choosing to rent instead of buying a house, as the cost of renting is much lower than the cost of purchasing a house.

One reason for the high rent prices is the lack of available properties. Sydney has a population of 5 million people, and much fewer homes. This imbalance means that people are competing for a limited number of properties, which drives up the price.

Unlike sale prices, median weekly rent in Sydney do no exhibit pronounced peaks in the recent years. There is a sign that rent prices for houses have stabilised at $727 PW in the short term.

Rent prices for units follow the same patterns as houses, plateauing at around $515PW for the past several years after a decline from a peak of $554PW in 2018 Q2.

Use the interactive chart below to explore the Sydney rental prices in detail.

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Another reason for the high rents is the strong economy. Sydney is the financial capital of Australia, and businesses are willing to pay high prices to be located there. This has created a lot of wealth in the city, and has driven up the cost of living.

Despite the high cost of Sydney rent, there are still some affordable areas to rent in. The inner west and north west suburbs of Sydney are the most affordable. Conversely, the eastern suburbs and south Sydney are the most expensive, with the median rent price hitting over $2,000 per week in sume LGAs.

If you are looking to rent in Sydney, it is important to do your research and find an area that is affordable for your budget. You can try searching for rental listings via online portals such as Real Estate, Domain or Rentola Sydney. It is also important to be aware of the increasing cost of Sydney rent, so you are not caught off guard when you are looking for a property.

Gross Yield on Investment Properties in Sydney

In a market where Sydney property prices are constantly breaking records, gross yield can be an important factor for investors to consider.

Gross yield is the percentage of the purchase price that the investor receives in income each year. In Sydney, gross yields for houses ranges from 1.0% to 2.9% depending on the location. The range for units is much higher at 2-5%. Lower priced suburbs typically offer higher yields. However, there are exceptions to this rule.

At a high level, Gross Yield for Sydney houses reached its’ peak of 3.9% in 2012 as house prices were more affordable than today. It has been on a downtrend ever since. Explore the chart below to visualise the gross yield trends for Sydney LGAs in detail.

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The highest gross yields can be found in the inner city and the western suburbs, while the lowest yields are in the eastern suburbs. This is partly due to the higher prices in these areas, but it is also because there is less availability of rental properties.

Investors who are looking for a higher return on their investment should consider suburbs that have a higher gross yield. However, it is important to remember that this is only one factor to consider, and it is also important to look at the potential for capital growth.

Sydney Property Type Demand Profile

There is no one Sydney dwelling type, as the city is home to a diverse range of housing types and styles. From terrace houses and apartments to mansions and waterfront properties, Sydney has something for everyone.

As far as residential property market is concerned, the most in-demand Sydney real estate are 2 bedroom units, followed by 4 bedroom houses. The units are dominant in Inner Sydney, whereas outer LGAs are more urban and have 3 and 4 bedroom house preferences.

Use the chart below to understand which property types have the highest demand in Sydney real estate market.

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Despite the high cost of housing in Sydney, houses are still in high demand. This is largely due to the fact that Sydney is a great place to live, with plenty of job opportunities and a great lifestyle. Houses also offer more space than apartments, which is a big draw for families.

Townhouses are a relatively new type of dwelling that is becoming increasingly popular in Sydney. They offer the best of both worlds, with the affordability and convenience of an apartment combined with the space and privacy of a house. Townhouses are also typically located in prime locations, making them a popular choice for those who want to be close to all the action.

Sydney Buy & Rent Search Index

Sydney is one of the most searched city globally when it comes to buying a house. And it’s not just locals who are taking notice of Sydney’s booming property market. International interest in Sydney’s property market is on the rise in current post-pandemic environment.

The Sydney property market is still relatively affordable compared to other major cities around the world, and it is expected that the number of people searching for houses to buy in Sydney will continue to increase in the years to come.

The chart below illustrates the trends for “buy” and “rent” online searches in Sydney. You’ll notice that there are more searches for properties listed for sale than rental properties. The searches peaked towards the end for 2020 and have since returned to average historical levels.

The black lines on the chart highlight the search index, which is calculated by apportioning the LGA “buy” or “rent” searches to the state average.

The overall search index for Sydney is calculated as an average of all LGA indexes. It has historically hovered between 7.0 and 8.0 for houses which is higher than the index in less populated and economically developed areas in the state.

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What could be the reason behind this high search interest? There are a few possible explanations.

According to Google Trends, the search interest for “rent houses Sydney” is highest in the months of January, February, and March. This is likely because these are the months when people are most likely to move, as the weather warms up and the school year comes to a close.

The search interest for “rent houses Sydney” is highest in the suburbs of the inner west and the south-west. This is likely because these suburbs are more affordable than the inner city and have better public transport options.

Sydney Market Growth Rate Cycles

The Sydney property market has always been one of Australia’s most expensive and sought-after markets. And over the years, it has exhibited clear cycles of growth and decline.

This means that there are periods of time when the market is hot and periods of time when the market is cool. The hot periods are usually characterised by high prices and strong demand, while the cool periods are usually characterised by lower prices and weaker demand.

The Sydney property market has entered the growth phase in early 2020. The market has been performing well since then, with house prices and rents increasing. The market is expected to continue to grow in the short-term.

The chart below illustrates the year on year changes in Sydney property prices. We can see that the Sydney housing market was in decline between 2018 and 2019, with house prices in some LGAs dropping by as much as 8%.

A similar pattern can be observed for units with trough in some LGAs reaching negative 4% in 2019.

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It’s important to note that this growth is not uniform across all areas of Sydney. The inner and middle-ring LGAs are performing the best, with price growth on the upper range of the chart. The outer LGAs, on the other hand, have seen more modest growth of around 3%.

The Sydney property market has been in a hot period since around the second half of 2020, and this is expected to continue for the next few years.

This doesn’t mean that you can’t buy property in Sydney during a cool period – in fact, there are often great opportunities to buy property during these times.

So, what are the key indicators that a decline phase is imminent?

The first sign is when prices start to plateau or decline. In the pas this has happened when the Reserve Bank starts to increase interest rates, as this makes property less affordable.

Another sign is when auction clearance rates start to decline. This usually happens when the market becomes over-saturated with property.

Finally, watch out for when the number of property listings starts to increase. This is a sign that sellers are starting to become nervous about the market outlook.

Instead of attempting to time the next phase, we recommend relying on visualised growth rates on our charts. It is a great tool to be informed about the current and imminent phases of growth in the market.

Ratio of Renters to Owners in Sydney Property Markets

The importance of having more owners than renters in a property market is that it gives people a sense of stability. Owners are incentivised to maintain their property and contribute to the community, increasing the appeal of the neighbourhood as a whole.

The ratio of renters to owners in Sydney is slowly but surely shifting in favour of renters. In the early 2000s, the percentage of renters in Sydney was around 25%. However, this number has increased to 35% in recent years. This is primarily due to the increasing cost of Sydney real estate, which has made it increasingly difficult for young people and families to purchase a home.

The high number of renters in Sydney inner suburbs is partly due to the high cost of housing, which forces many people to rent.

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When the majority of people in a community are renters, they are less likely to invest in the community. This is because they are not likely to be there for the long run.

As a rule of thumb, there should be no more than 45% renters in an area for it to be considered to have a good investment potential.

In Sydney, the ratio of renters to owners is also skewed towards owners in the Hills Shire and Hunters Hill, where there are more than four times as many owners as renters.

Despite the high cost of rent, Sydney remains a popular destination for people looking to rent a property. There are a number of reasons why Sydney is such a popular destination for renters.

It is likely that the trend of more renters and fewer owners will continue in Sydney, as the cost of housing continues to increase.

Ratio of Units to Houses in Sydney Property Markets

There is a definite trend of more apartments being built in Sydney than houses. This is particularly the case in the inner city and the lower north shore. For every 10 new dwellings built in Sydney, seven are apartments, three are houses.

This trend is largely being driven by population growth, with more people now choosing to live in apartments than ever before. There are a number of reasons for this, including the cost of housing, the ease of getting around, and the growing popularity of city living.

The ratio of units to houses in Sydney is around 18:82, but this is likely to change over time. If you’re thinking of investing in the Sydney property market, it’s important to keep this trend in mind and consider whether an apartment or a house is the right investment for you.

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While the number of houses sold in Sydney has increased modestly over the years, the number of units sold has increased by about a third.

While there has been a lot of talk about the oversupply of apartments in Sydney, it’s important to remember that they still represent a very small proportion of the overall housing stock. And with population growth expected to continue, there is still plenty of demand for new apartments.

In the inner city, for example, the proportion of apartments to houses is now around 50:50. But this is likely to change in the coming years, with more apartments being built to cater for the growing population.

This is most likely due to the fact that apartments are becoming more and more popular, as they are more affordable and easier to live in.

Sydney Property Market Socio-Economics

Sydney is one of the most expensive places to live in the world. The city has a high cost of living, with property prices and rent levels among the highest in the world.

This has resulted in a socio-economic divide, with some experts stating that the rich are getting richer and the poor are getting poorer.

There are a number of factors that contribute to Sydney’s socio-economic diversity. One is its history of immigration, which has resulted in a mix of cultures and income levels. Sydney is also home to a number of large corporations and high-income earners, as well as a large number of low-income earners.

The socio-economic status of Sydney’s residents has a number of consequences. For example, it can impact access to education, healthcare and other essential services. It can also lead to social and economic inequality, as well as increased crime and violence.

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2 – 4

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People in the higher socio-economic status are more likely to be able to afford to purchase and rent property in the area. This helps to increase demand for rental properties in the market and frequently attracts high-quality long-term tenants.

IRSAD stands for the index of Relative Socio-economic Advantage and Disadvantage. This metric provides a high level view of the socio-economic status of a property market.

There are a number of initiatives that have been implemented to address Sydney’s socio-economic diversity. These include the provision of affordable housing, the development of disadvantaged neighbourhoods and the promotion of social inclusion. However, more needs to be done to ensure that all Sydneysiders have access to opportunities and essential services.

The level of socio-economic status in Sydney can have a big impact on people’s lives. For example, people from affluent areas generally have better access to education, health care, and employment opportunities. They also tend to have higher incomes and be more likely to own their own home.

People from low socio-economic status areas, on the other hand, generally have less access to these things. They are also more likely to be living in poverty, be unemployed, and have poor health outcomes.

Conclusion


Sydney is one of the most expensive cities in the world to live in, with high property prices and rental costs. Despite the cost, Sydney is still a desirable place to live in due to its strong economy, job opportunities and bustling lifestyle.

Property investment here is desirable in order to take advantage of its minimal vacancy rates, above average population growth and capital appreciation. Buyers should look for areas that show promise for growth, as well as researching the real estate markets in order to find the best properties. Renter demand is strong and more renters than owners are increasing the competition for properties.

However, it is important to be aware of the socio-economic divide that exists and the increasingly unaffordable nature of the city. But, overall Sydney has a diverse socio-economic status and a strong economy, making it attractive for people looking to move and invest.

Doing your due diligence before investing in real estate is important. With the tools from HtAG Analytics, you can swiftly analyse the entirety of the property market across Australia to gain a better understanding of the risk, capital growth, and potential cashflow. Our Relative Composite Score (RCS™) integrates traditional market data points into a single score, saving you time and energy.

With fresh updates every month, this real-time data allows users to gain a trustable and complete overview of the market. Make sure to take advantage of this powerful tool now by subscribing to have full access using one of the options below.

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More About Sydney Property Market

What infrastructure projects are currently planned for Sydney?


There are many infrastructure projects currently planned in Sydney, Australia. Some of the most notable ones include the WestConnex project, the Sydney Metro project, and the Sydney Harbour Bridge Upgrade project.

You can find out more about current and planned projects on NSW government website.

2 thoughts on “Greater Sydney Property Market Forecasts”

  1. Greater Sydney is the largest metropolis in Australia and it hosts the headquarters of many national and international businesses as well as being the location of the nation’s busiest international airport. Sydney Harbour is world famous, but this great city has many centres. The administration of the conurbation is split between 29 local government areas (LGAs) each with its own urban centre. Some parts of Sydney property market have glamour and status, while others are home to working class communities.

    A decade of economic boom encouraged businesses in the metropolis to expand, hiring staff from outside the city as the local workforce was fully employed, causing the real estate market to experience property shortages and rising prices. Developers, encouraged by house price predictions, invested heavily in new housing projects. However, as the economy cooled, expected median prices became unaffordable.

    While there is still population growth and demand for housing in the area, the double-digit growth in prices expected by developers have proven to be unsustainable and now prices are falling. However, there is still capital growth available in Greater Sydney for those who can spot the best suburbs to invest.

    Sydney council areas with highest Capital Growth projections
    The market cycle graph for house prices in all LGAs in Greater Sydney shows the rate of change in each quarter. Overall, when house prices are rising, they rise in all LGAs and when they fall, they fall in all LGAs. However, the rate of increase and the rate of decrease varies by LGA. 2015 was a particularly good year for houses in all LGAs.

    One notable LGA to look at in 2015 is Cumberland. It had the second highest price rise of all of Greater Sydney property market. It was beaten only by neighbouring Liverpool. Cumberland had a median house price rise of 19.49 percent in 2015, when Liverpool experienced annual price growth of 19.79 percent. These two markets have fallen hard since that date. Although price growth continued in those two LGAs. Their rate of growth ceased to make them the leading performer, with the more prosperous waterfront LGAs getting faster price growth in 2016, when Northern Beaches had the highest price growth rate at 15.26 percent and Cumberland had the second-lowest price rise, which was 8.74 percent.

    Capital Growth Rate for Sydney LGAs

    This switch between the house price performance has continued to this day in the first quarter of 2020, with the workaday outer suburbs dipping into price falls in 2018 and the more exclusive areas maintaining price rises. In 2020 the market for houses in Sutherland will experience its worst year ever in terms of price performance. HtAG forecasts predict a median house price loss of 5.91 percent for the whole year. However, this represents a turnaround year because, as we have already seen, prices fell by 8.91 percent in January 2020.

    HtAG forecast show that prices in Cumberland will continue to fall in 2021, but by 3.63 percent. Sutherland Shire house prices were the worst performers in 2019 with a fall of 6.47 percent. Prices will fall by 6.36 percent in 2020, but that represents the biggest median house price fall in all of Sydney property market.

    The best performer through 2020 and 2021 is Woollahra. This LGA seems to have all the indications of a high-status suburb. It includes iconic Bondi Beach, it has a golf course, and it is close to the central business district and fashionable shopping areas of the city. Another probable reason for strong performance in Woollahra relative to other LGAs in Sydney is its relative price stability. Woollahra didn’t get those double-digit price rises experienced by many Sydney LGAs in 2015.

    While the median house price rise in Cumberland and Liverpool were touching 20 percent, the price rise in Woollahra was 8.56 percent. The slow down in price rises in Woollahra was less pronounced in the following years and the average house price growth in the LGA has been bumping along the 5 percent level since the beginning of 2018. HtAG forecast expects median house prices to rise by 4.38 percent in 2020 and 4.59 percent in 2021.

    Property market overview for houses

    Despite the market in Sydney being overpriced, the most expensive LGAs in the area have not experienced price falls. The prestigious central waterfront LGAs were already fully built up before the price boom occurred. Thus, lack of new building space prevented the housing market for residential property in these areas from becoming oversupplied.

    As can be seen on the median house price map above, Willoughby City experienced a price increase of 4.41 percent over 17 house sales and Waverley saw a price increase of 3.9 percent on 14 house sales, while prices fell by 8.91 percent in Cumberland LGA on 36 house sales during the same period. The median house price fell by 6.62 percent in Sutherland Shire on 27 house sales and 6.1 percent over 29 house sales in the City of Paramatta.

    Despite all being part of the same city, the market for houses in the above-mentioned areas is very different. The median house price on sales in Waverley was A$3,422,395 and in Willoughby City it was A$2,604, 118. The average sale price in Cumberland was A$838,159 and in Sutherland Shire it was A$1,176, 327. Areas surrounding Cumberland and Sutherland Shire have cheaper housing and experienced price fall, but at a slower rate.

    The outer suburbs relate to the type of typical housing market that is common in the rest of Australia. These are the areas where people get an income-based mortgage and rollover profits from a previous house sale when they buy a home. The house price trend in these markets, therefore is much more sensitive to changes in employment prospects. Being high-priced areas in this category of housing market, Cumberland and Sutherland Shire are suffering most from the sudden slowdown in the general economy.

    Prestigious waterfront LGAs are hemmed in on all sides, have little development land available, and have a finite stock of houses. Buyers in these areas rely on investment income and bonuses from specialists jobs in the finance sector. As the stock market is still doing well, there is still an increasing amount of money available for sought-after addresses. As a larger pool of buyers chase a restricted number of properties, prices will increase. A crash in the stock market would see prices in those prestigious areas fall as existing owners try to recover from their losses, putting more houses for sale in those areas at a time when no new buyers want to invest in high-status housing.

    Price forecasts for Sydney houses & units

    The median price forecasts for Greater Sydney housing market, shown on the graphs above, illustrate how assessments of property data change over time.

    This graph is taken from the specialist Greater Sydney house sales market report on the HtAG real estate website. It shows how those who research median house price growth to plan cash flow can sometimes be blindsided by unexpected performance in the economy as a whole.

    A prediction made in Q4 2015 would have expected prices to continue to rise at the same rate that had been taking place over the previous two years. This trend would have failed to spot the decreased rate in price rises during 2016, but it’s forecast would hit the peak in Q4 2017 almost exactly. Later estimates would be based on more recent datasets that include the slowing of prices rises in 2016. Weighting recent data, those forecasts would have missed the peak and drop in median property price increases. The current HtAG forecast has a recent flattening of demand to work with. However, the forecast will change as more data comes in showing actual events.

    Top performing suburbs in the Sydney housing market

    The three top performing suburbs buck the price movement trend of the LGAs to which they belong. These are

    Surry Hills in the City of Sydney LGA,
    Hornsby Heights, in the Shire of Hornsby and
    Mona Vale in the Northern Beaches LGA.

    The median house price in all of these LGAs fell during Q1 2020 despite the fact that they included the three best performing suburbs.

    The largest median house price rise was experienced over the sale of 13 houses in Surry Hills. The median house price rose 8.1 percent during the quarter while the median house price in the LGA for Surry Hills, the City of Sydney, the median house price fell by 2.68 percent. The next highest price rise per suburb occurred in Hornsby Heights over 8 sales. This was a median price rise of 6.59 percent, while house prices across the Shire of Hornsby fell by 4.24 percent. The median house price in the Northern Beaches LGA fell by 3.75 percent, but Mona Vale prices, within that LGA, rose by 5.99 percent over 9 sales.

    At the other end of the price change league, the suburb of Denham Court had the worst performance in Q1 2020. Denham Court is in the Campbelltown City LGA, where prices are relatively low. The median price in Denham Court was A$758,302 over 16 sales during Q1 2020. By comparison, the median price for house sales in the same period was A$1,890,002 in Surry Hills, A$1,246,605 in Hornsby Heights, and A$2060,897 in Mona Vale. So, the price falls in Denham Court and the price rises in Mona vale, Surry Hills, Hornsby Heights, and Mona Vale are consistent with the theory that expensive properties are safer targets for investments than the lower end of the market.

    Denham Court median house prices fell by 10.15 percent in Q1 2020 over 16 sales, while house prices in the Campbelltown City LGA as a whole fell by 2.97 percent. The second biggest median house price fall in Greater Sydney in Q1 2020 occurred in Guildford, which is part of Cumberland LGA, which was widely discussed above. Cumberland house prices fell by 5.91 percent; Guildford’s prices fell by 6.52 percent over 12 house sales. The third worse performer in the Greater Sydney property market for houses was Thornleigh, in the Shire of Hornsby, where prices fell by 4.24 percent in Q1 2020. As Thornleigh prices fell by 6.47 percent over 8 sales, the Shire of Hornsby LGA includes suburbs that had the second highest price gains and the third biggest price falls in Q1 2020.

    Suburbs with highest gross yield for houses

    In the rental market, investment activity has the reverse dynamic to the house sales market. The very high sales prices in the high-spec suburbs of Sydney make it very difficult to make any money on renting properties out in those areas. The cheaper LGAs in Sydney offer better rental yields and so are more attractive prospects for landlords.

    Gregory Hills, Jordan Springs, and Bradbury have the highest rental yields (we only considered suburbs with High Confidence forecast data for this analysis) in the Greater Sydney property market. However, the yields on houses in Sydney are not as good as the yields on units. Gregory Hills is a semi-rural suburb in the Campbelltown City LGA and has a 3.89 percent rental yield on houses. Both sales prices and rental levels fell in the suburb, by 1.25 percent and 1.44 percent respectively, so rental yields fell slightly in Q1 2002, but still managed to remain higher than in other suburbs. Jordan Springs comes close to the yield levels of Gregory Hills at 3.87 percent. This suburb went up in the yield table in Q1 2020 because house prices fell by 1.91 percent and rent levels fell by just 0.7 percent.

    Jordan Springs is on the western edge of Greater Sydney in the Penrith City LGA. The third highest rental yields can be found in Bradbury, to the south of the city in the Campbelltown LGA. The suburb was higher up in the yield league table until Q1 2020. Rent levels fell in that quarter by 1.45 percent and the median house sales price fell by 0.05 percent lowering the yield on houses for rent to 3.8 percent.

    The lowest rental yields can be found in Strathfield, Concord, and Epping. House sales prices are very high in these areas. The median sales price in Strathfield in Q1 2020 was A$2,495, 589. Sales prices fell there by 4.32 percent, which is an uncharacteristically large drop for high-priced suburbs. Rent levels fell by 7.2 percent, which gives the suburb the worst yield performance of 1.72 percent.

    Strathfield lies in its own LGA close to the inner cluster of Sydney suburbs. Concord is a neighbouring area with some attractive waterfront areas on the Paramatta Ricer. It lies in the City of Canada Bay LGA. The average house sale price in Concord rose by 4.07 percent in Q1 2020 while rent levels plummeted by 13.87 percent, giving the suburb a rent yield of 2.03 percent.

    Epping is well out of the centre of Sydney, but manages to command high sales prices for its properties. It lies in the City of Paramatta LGA. House prices in Epping fell by 1.71 percent in Q1 2020, while rent levels fell by 6.61 percent, lowering the rent yield in the suburb to 2.18 percent.

    Sydney property market overview for units

    Aspirational properties in the outer suburbs are houses for families and units are bought by those who can’t yet afford to buy a house. In the inner LGAs, units are built and designed for high-flyers who want to be close to their high-paying jobs in the central business district. Central LGAs are also top investment suburbs for those who have enough money for a family home elsewhere as well as a place in the city. Businesses that need units to house specialist staff on temporary assignment tend to invest in property close to the central business district. Overseas buyers that want a place in Sydney for occasional use will buy units in the centre of the city rather than houses that need regular maintenance and are less secure when left unoccupied.

    Once again, the inner Sydney LGAs have a different market for units than the outer suburban LGAs. Again, prices in the outer suburbs are linked to the employment market, whereas the price trend of units in the inner LGAs are linked to the price of the Australian Dollar and the level of the stock exchange index. Prices are falling at a faster pace in those more accessible LGAs than in the investment-grade inner suburbs. This is because units have been priced beyond the reach of target buyers in the residential market, while the international market and out-of-towners still have money to spare for prestigious unit developments.

    What is the trend for unit prices in Sydney?

    The forecast graph for unit sales in Greater Sydney property market shows that the steep increase in prices peaked a little earlier for units than it did for houses. Whereas the sharp incline in prices for houses levelled off in Q3 2018, that slowing of the rate of price increases in the market for units began in Q1 2018.

    All sales markets in Australia showed a sudden decrease in sales in Q3 2018 to Q2 2019. This drop in demand is behind the slowing of price rises and, in the case of many Sydney suburbs, the beginning of price falls. HtAG forecasts expect demand for units in Greater Sydney to increase over the next two years. This should bring the median price of units back to a rising trend.

    Sydney suburbs where units had best annual capital gains

    Unit prices saw the biggest gains during Q1 2020 in Darlinghurst, Chatswood, and the City of Sydney. Darlinghurst lies within the City of Sydney LGA, while Chatswood is away from the city centre in the northern suburbs and part of the Willoughby City LGA. Unit prices rose by 6.2 percent in Darlinghurst, by 6.14 percent in Chatswood, and by 5.66 percent in the Sydney. Willoughby City LGA as a whole experienced a fall in the median sales price of units by 0.66 percent. Unit prices in the entire City of Sydney LGA fell by 2.52 percent in Q1 2002.

    The largest fall in the median unit sales price in Q1 2020 occurred in Ryde, which is part of the Ryde City LGA. The average unit sales price in Ryde fell by 5.78 percent, while unit prices in the Ryde City LGA rose by 0.48 percent. Merrylands in the Cumberland LGA had the second largest price drop in Greater Sydney at 5.05 percent. The third largest price drop for units in the Greater Sydney property market was experienced in Wolli Creek in the Bayside LGA. While average unit prices fell by 2.33 percent in Bayside LGA as a whole, the median unit price fell by 4.31 percent in Wolli Creek.

    Which Sydney suburbs have the highest gross yield for units?

    As at Q1 2020, the suburb with the highest rental yield (with High Confidence Forecast) for units is Penrith. This district sits in an LGA of the same name in the western outer suburbs of Greater Sydney. The average unit sales price in the Penrith suburb is A$395K. Prices there fell by 2.77 percent in Q1 2020. At the same time that unit sales prices in Penrith fell, rent levels for units rose by 0.26 percent, improving rent yield and giving Penrith units for rent a yield of 5.01 percent.

    The next most profitable rental market for units in Greater Sydney is in the suburb of Auburn, which is close to the centre of Sydney and located in our old friend, Cumberland LGA. Unit price falls in Cumberland have really benefited the landlords in the area. Auburn rent levels actually fell in Q1 2020, by 0.25 percent. However, unit sales prices fell even further – by 2.07 percent. Those price movements improved rental yield in Auburn to 4.82 percent.

    The third best suburb for those who want to buy to let is Merrylands, which is also in the Cumberland LGA. Merrylands has a cheaper unit sales market than Auburn and prices fell there by 4.78 percent in Q1 2020. The fall was severe and rent levels also fell in the same quarter. However, rent levels only fell by 0.99 percent, resulting in a yield increase to 4.8 percent.

    Conclusion

    Overall, property investors considering the Greater Sydney property market for capital gains should look for properties in high end suburbs. Those areas will avoid the price falls occurring in the cheaper areas as of Q1 2020. Investors aiming for best cashflow opportunities should look to the cheaper suburbs and focus on units in order to get gross yields above 3%.

  2. The Sydney economy is one of the most prosperous in the world. The city is home to several Fortune 500 companies and is a major centre for finance, media, and business services. The city’s economy is highly diversified, and it is the largest economy in Australia.

    The retail sector is a major employer in Sydney, with over hundred thousand people working in the industry. The construction sector has also been booming in recent years, with large-scale infrastructure projects underway, including the new Sydney Metro, the Western Sydney Airport and the Sydney Harbour Bridge Upgrade. The city is also home to a number of major universities, which are attracting many students from around the world.

    The city’s strengths include its world-class infrastructure, strong research and development sector. Sydney is well positioned to take advantage of the growth in the Asia-Pacific region and is expected to be the fastest growing city in the country in the years ahead.

    The economy is expected to continue to grow in the years ahead, with the city’s population forecast to reach 7.5 million by 2036. This is providing a strong underpinning for the economy and is creating opportunities for businesses and workers.

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