Strathfield, NSW 2135

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2 thoughts on “Strathfield, NSW 2135”

  1. The total adult population (15 years or older) of Strathfield 2135 NSW is 22,989, with a median age of 32. Of those, 46.29% are married, 7.01% are divorced or separated, 42.87% are single and 3.81% are widowed.

    The average household size is 2.8 people per dwelling, and the median household monthly income is estimated to be $9,692. The median monthly mortgage repayment for households in this suburb is $2,765 which is 28.53% of their earnings.

    Source: ABS Census Data (2021)

  2. Strathfield, NSW 2135 is a growth powerhouse, and that is simply observed when we look at the dramatic disparity between the typical value expressed in thousands ($3,488k) and the weekly rent ($742 per week).

    This means that the typical value expressed in thousands is over 4.5 times greater than weekly rent. Such growth is observed rarely.

    What does this tell us?

    Well first and most obviously that most of the growth for Strathfield, NSW 2135 has occurred in the capital growth domain. This, more importantly, also tells us that the market fundamentals for Strathfield, NSW 2135 are well positioned for sustained capital growth — the area with such disparity between typical values (expressed in thousands and rents) has been experiencing substantial and sustained growth which suggests that its fundamentals are such that this will most probably continue in future. At what rate, however, remains a mystery for now.

    These observations are confirmed when looking at its growth in the past decade. Strathfield, NSW 2135 has experienced a 122% growth in the last decade, meaning that its value has more than doubled in that timeframe. Again, this is indicative of solid market fundamentals.

    What do I mean by this? I mean that the markets supply and demand is imbalanced in such a way that it leads to sustained growth. We can also see from the number of sales data that Strathfield, NSW 2135 is outpacing its neighbours in the LGA, 11 sales in Strathfield, NSW 2135 to zero sales in its adjoining suburbs.

    Conversely, Strathfield, NSW 2135 has seen only 22% growth in rents in the past decade.

    Interestingly, our projections indicate continued growth for Strathfield, NSW 2135. The growth is projected to land between -1% and 11%, with a rather small error rate of 5.6%.

    Now let’s look into other RCS scores to see if the above observations are warranting.

    WHY:

    With a Relative Composite Score (RCS) of:
    1. 29 / 100 for risk;
    2. 10 / 100 for cashflow;
    3. 84 / 100 for capital growth;
    4. 41 / 100 score for overall.

    As per my previous observations, the RCS indicates that the area is a growth area, with the highest value being assigned to the capital growth RCS (84). In all honesty, although this score is high, it indicates that Strathfield, NSW 2135 is not even in the top 10% of suburbs with respect to growth in Australia (it is in the top 16%). Considering that RCS is a forward looking metric (5 years into the future) and the fact that there is a 4.5 times disparity between typical values expressed in thousands and weekly rents tells me that Strathfield, NSW 2135 may be positioned for some colling off in the coming years.

    I think the future growth should be somewhere around 5% or less annually, as opposed to 11%, pending macro-economic conditions. Rents, on the other hand, might experience a more substantial growth.

    Surprisingly, its Lower Risk score is considerably low for an area that has experienced sustained growth. Combined with unaffordability of the area, I would be cautious to proceed investing in Strathfield, NSW 2135.

    What are some of the metrics that form part of HtAG Analytics risk scores:

    • Floor risk;
    • Bushfire risk;
    • Costal and/or river erosion risk;
    • IRSAD;
    • Renter to owner ratio;
    • GRC;
    • Average age of properties;
    • Average monthly sales volume;
    • Average monthly rentals volume;
    • Error rate
    • Plus, over 60 other metrics…

    Let’s look at other important metrics that buttress or form part of the RCS:

    Fundamentals

    ISRAD score: 10 — the ISRAD metric highlights the socio-economic standards of the area in question. For Strathfield, NSW 2135, the score of 10 is a perfect score. This highlights Strathfield, NSW 2135 as an affluent area which is a good foundation for those interested in investing in the area.

    Be patient, we need to look at other metrics.

    R|O Ratio: 90% — this is an extremely unfavourable statistic. A high proportion of renters in the area is usually indicative of reduced liveability for the area. This is only a general rule of thumb which I would say does not play out in the context of Strathfield, NSW 2135. Why? I think the high proportion of renters is indicative of exactly opposite—people love living in Strathfield, NSW 2135 but they rent instead of owning a property simply because of the reduced affordability on the one hand and low growth in rents on the others. This means that it is more affordable to rent than to buy in Strathfield, NSW 2135 hence why people seem to be opting for the option more. The fact that its ISRAD is 10 indicates that it is a highly liveable area.

    Also, the sustained substantial growth in the past decade is also indicative of liveability.

    This is a perfect indication of the danger of looking at one metric in isolation. In most cases a high R|O Ratio is a bad sign, however, when we consider this statistic in the context of ISRAD and past capital growth, we can see that the rule of thumb does not apply to Strathfield, NSW 2135.

    Side note—a flow on effect of a rule of thumb is as follows:

    Balanced or favourable R|O ration = better liveability = higher hold periods = restricted supply = price growth.

    U|H Ratio: 49% — this is a balanced statistic and one that I personally do not think plays a role in decision making in the context of Strathfield, NSW 2135.

    The usual flow on effect is usually exemplified as such:

    Higher proportion of units = higher proportion of renters which = surplus in the supply of properties due to more change over (lower hold periods) in rental in comparison to owner occupier properties = subdued price and rental growth.

    With respect to Strathfield, NSW 2135, the subdued rental growth is mainly the result of the exorbitant growth in the capital growth domain.
    Remember this rule of property investing — it is very difficult to find areas that have seen a lot of growth in both domains. Usually, if one domain grows, the other does not.

    GRC: its GRC is favourable for a few reasons, most of which relate to the evident cyclicality in the market. This is suggestible of healthy market fundamentals—the cyclical nature of growth and decline immediately indicates that the area is not supported by a single industry or unfavourable demographics.

    A general rule of thumb is — if there are no cycles to the GRC and if there are also outlier sharp increases and decreases in the growth rate of an area, this is indicative of unbalanced market fundamentals with respect to industry and demographics.

    The only negative I can find with the GRC was in the year 2012 and 2019 which saw the area experience a rather substantial negative growth of about -3 and -9% respectively. A general rule of thumb I apply in analysing the area is to impose a zero-threshold rule—areas that go below the zero threshold on a few occasions take a back seat to those that do not, simply because those that do not always have better market fundamentals. In the instance of Strathfield, NSW 2135, I think the negative growth was actually healthy for the market’s affordability—it had to experience negative growth to bring itself back in line of more or less healthy growth.

    Supply Metrics

    I will say that all supply metrics for Strathfield, NSW 2135 are all favourable, meaning that has been a restriction on the supply of new properties to the market. It is rare to see that all supply metrics are coloured green. Great sign!

    SoM%: 0.31% (16 listings)

    Inventory: 1.5 months

    Hold Periods: 11.35 years

    Not only are these statistics all very opportunistic, but their respective trend lines are moving all in accordance with putting more pressure on the restriction of the supply. All trend lines have also seen a decrease since 2020 or an increase in the context of hold periods.

    SoM% trend line is reducing = restricted supply = price growth all things being equal;

    Inventory trend line reducing = restricted supply = price growth all things being equal;

    Hold periods increasing = restricted supply = price growth all things being equal;

    On top of all of this BA Ratio is at 0.61%, which is rather balanced meaning that new property scheduled to be introduced into the area will not will not affect the reduced supply.

    Demand Metrics

    Demand metric, in combination with the supply metrics, highlight a market that has capital growth potential, as highlighted by the RCS, also. Most of the demand metrics are favourable and green!

    DoM: 31 — very opportunistic with the trend line gradually reducing since October last year. Great sign indicating an increasing demand.

    Vacancy Rate: 0.86% (18 vacancies)— very opportunistic with the trend line sharply reducing since October last year. Great sign indicating an increasing demand for rental properties.

    Clearance Rates: 52.94%– this is a balanced statistic which indicates that market is cooling off a little due to the lack of affordability. However, what is cooling off is actions, and not much in the slightest because the statistic provided is still balanced. This means that with other two demand metrics highlighting an increase in demand, clearance rates will not play a dramatic role in restricting price growth too much.

    Overall, as indicated by the RCS, the area is positioned for sustained growth however the issue with affordability does not make it a primary pick for me.

    For a cheat sheet which highlights what are unfavourable, balanced and opportunistic statistics, refer to our Data Dictionary.

    If you want something similar with better metrics, have a look Baulkham Hills which I did an overview for recently and which I would consider a better investment option to Strathfield, NSW 2135.

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