The Sydney property market saw double-digit year-on-year growth in 2015 and the median house prices were 30% higher than just two year ago but what does the Sydney property market hold in store for 2016?
Where should you buy property in Sydney in 2016? What Sydney suburbs are offering strong rental returns for investors? Are there good options still available to first home buyers?
The Sydney property market has a mix of locations, pricing and growth potential to watch in 2016 for property investors and first home buyers.
Top Sydney suburbs to watch
Dulwich Hill
Within the 10 kilometre sought-after radius of the CBD, Dulwich Hill is spoilt for public transport options, abuts trendy Marrickville and bordered by the Cooks River. This location offers established homes and pockets of apartment complexes.
Median House Price: $1,369,000
Median Unit Price: $650,000
Tempe
The still popular Tempe offers good buying at the entry-level with homeowners who are not fazed by airport proximity. Close to Newtown, the CBD and Sydney University it offers a great combination of owner-occupiers and a high rental demand.
Median House Price: $980,000
Median Unit Price: No data
Kingsford
Due to benefit from the development of light rail, Kingsford is popular with residents and students from UNSW. It offers relative affordability amongst its pricey neighbours, Coogee and Randwick, and is close to beaches and accessible to the city. Kingswood provides the opportunity of value with growth.
Median House Price: $1,830,000
Median Unit Price: $780,000
Potts Point
For investors, inner-city apartments make for great buy-and-hold properties and Potts Point ticks the boxes for location, entry price point and long-term capital growth potential.
Median House Price: No data
Median Unit Price: $627,500
Parramatta
With the $2 billion Parramatta Square urban renewal project on the horizon Parramatta represents savvy apartment buying with huge demand on rental properties and an ever-increasing population growth.
Median House Price: $1,100,000
Median Unit Price: $565,000
Ambarvale
Ambarvale is located only five minutes from Campbelltown and is definitely one to watch for opportunity and affordability, particularly for investors.
Median House Price: $508,000
Median Unit Price: $342,000
Forestville
The Frenchs Forest Hospital has a proposed completion date in 2018 but towards the city is Forestville. This suburb has become a family friendly community only 10 minutes from beaches and five minutes to Chatswood.
Median House Price: $1,375,000
Median Unit Price: $1,000,000
Asquith
The upper north shore's Hornsby is spilling into Asquith; just one more train stop along and just a short drive to all the entertainment on offer in Hornsby. Asquith provides a little more space, less fast pace but with the same area benefits.
Median House Price: $1,200,000
Median Unit Price: $780,000
Thornleigh
Another family-friendly community bordering Hornsby is Thornleigh. It still provides entry buying free standing homes under $1 million and reaps the advantage of its location proximity to good schools and train services at a gentler price point.
Median House Price: $1,170,000
Median Unit Price: $770,000
What the experts think
It can be difficult to predict what lies ahead in 2016, but the experts have provided forecasts and tips about the Sydney property market:
Zac Peteh - Director, Mint Equity
Zac sees Parramatta as a Sydney suburb to keep an eye on due to the 2 billion urban renewal project and apartment prices within reach of first home buyers. Campbelltown, Camden & Penrith also represents some growth opportunities as Sydney pricing starts to weaken. These Sydney suburbs are developing more interest with investors due to lower capital cost and yields.
The recent financial changes imposed by Australian Prudential Regulation Authority (APRA) on the major banks has slowed down investor activity in the property market and stabilised Sydney house prices.
““We’re now seeing the start of a buyers’ market. Sydney property investor’s borrowing capacity has reduced considerably since the APRA changes. For example, one of my clients who could borrow an additional 1 million for an investment property prior to the changes can now only borrow an additional 600,000 for an investment property.””
Zac commented that owner occupiers still have very similar borrowing capacity as they did prior to the APRA changes. Owner occupiers should also appreciate more negotiating power in regards to the pricing as competition amongst purchasers slows.
Zac’s top tip for buying property in Sydney: Do your research and use your negotiating power as now is the perfect time to look for that new home.
Locations to watch: Parramatta, Campbelltown, Camden, Penrith and parts of the Central Coast like Gorokan and Wyong.
Brian White - Chairman, Ray White
Brian White sees Sydney’s eastern suburbs as the pick of investments for long term growth in 2016. “The appeal of the inner city areas over the last decade and more has transformed real estate markets. There is little evidence this trend is not set to continue into 2016 and beyond. The eastern suburbs are continuing to set remarkable prices. But the entire ‘ring’ around Sydney Harbour is predicted to retain strong popularity.”
Unlike a number of other property experts, White believes that Sydney will lead the way for growth again in 2016, though at a more subdued rate than previous years predicting a growth of 5%.
“As the year progresses, price increases will again be a feature. Especially if the economy performs as anticipated. The recent rise in the Australian employment numbers is excellent news.”
Locations to watch in 2016: Sydney’s eastern suburbs.
Grant Harrod - LJ Hooker CEO
Grant Harrod believes suburbs in Sydney’s southwest will do well in 2016.
“The state government’s commitment to infrastructure means there are good opportunities for families to invest in the southwest growth corridor,” he said. “The M5 widening, Westconnex and Badgerys Creek will all have a positive impact.”
Locations to watch in 2016: Sydney’s south west.
John McGrath - CEO, McGrath Real Estate
“I think the major growth in 2016 will come from both New South Wales regionals and southeast Queensland. Both have missed most of the price growth that Sydney and Melbourne enjoyed over the past few years and are therefore presenting very good value. I suspect both investors and sea changers will be eyeing off these markets.”
“Specifically, I see opportunities in Wollongong as well as the Central Coast. Their proximity to Sydney combined with the significant value gap will be very attractive to metropolitan buyers.”
“I think Sydney has seen almost all its price growth for the immediate future. I’m predicting that prices will hold around these current levels for the next six to 12 months but there are still pockets of Sydney that provide good value buying. There is a lot of infrastructure activity at the moment which will benefit a number of areas, resulting in growth in those areas.’’
Locations to watch in 2016: Wollongong and the Central Coast
