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According to the Economist Intelligence Unit’s (EIU)Worldwide Cost of Living report last December, Sydney is the tenth most expensive city in the world, with an average house price of $1 million.

Rising interest rates have already affected the Sydney property market, with house prices already falling since the price peak last March 2022. While we don’t expect a housing market crash, prices continue to fall throughout the year, and we may see a shift from a seller’s to a buyer’s market.

If you’re looking to invest in Sydney property this year, here is a guide to the predicted 2023 market.

Key Takeaways:

• The Sydney property market is seeing a downturn thanks to rising interest rates, with prices dropping as fast as they have for a decade.

• Currently, the RBA cash rate is driving down house prices at 3.6% as of March 2023.

• It is unlikely that the Sydney property market will crash, and we’ll see a housing market correction instead.

Sydney housing market data, trends, forecasts

The Sydney property market has seen a downturn in 2022 and is set to continue into 2023. Despite this, the Sydney housing market is still the most expensive in Australia, and house prices are expected to bounce back once Australian interest rates have stabilised.

Let’s look at the current state of the Sydney property market and the current predictions for 2023.

Will the Sydney property market crash?

If you bought or were interested in Sydney property over 2020 and 2021, you’ll likely remember the rapidly rising house prices in the area. As of late 2022 and beyond, Australia’s housing market is seeing a downturn, with the Sydney property market dropping by 10.9%. House price falls have been seen across the Australian property market, with Melbourne house prices expected to fall by 10% by the end of 2023.

However, according to experts, this downturn is not a housing market crash. Why?

A housing market crash is defined by a decrease in house prices and a lack of mortgage serviceability, resulting in homeowners being forced to sell and losing significant money on their investment.

However, we don’t see this in the Sydney real estate market. There is still a massive demand for property, with high rental rates and an influx of potential buyers.

Sydney housing prices

House prices are falling in Sydney and other major Australian cities due to rising interest rates caused by the rising RBA cash rate. If the RBA cash rate rises halt in 2023, the housing market will likely stabilise.

Below is a chart showcasing how Sydney property values are affected by RBA cash rate rises.

Top 10 most expensive Sydney suburbs in 2023

Despite the Sydney property market price falls, many suburbs still thrive in 2023. Here are the top 10 Sydney suburbs with the highest property values.

1. Darling Point — average house prices, $10,350,000.
2. Bellevue Hill — average house prices, $8,750,000.
3. Vaucluse — average house prices, $9,000,000.
4. Tamarama — average house prices, $9,200,000.
5. Double Bay — average house prices, $6,375,000.
6. Cremorne Point — average house prices, $5,648,500.
7. Centennial Park — average house prices, $5,010,000.
8. Dover Heights — average house prices, $6,500,000.
9. Mosman — average house prices, $5,250,000.
10. Longueville — average house prices, $6,400,000.

Top 5 Sydney suburbs for first home buyers in 2023

Despite Sydney house prices being some of the world’s most expensive, some suburbs are suitable for first home buyers with more affordable property prices. Because of the downturn in Sydney’s property market, property prices could reduce further into 2023.

1. Bradbury, average house prices: $777,500.
2. Ashcroft, median house price: $810,000.
3. Doonside, median house price: $850,000.
4. Kingswood, median housing values: $864,000.
5. St Marys, median housing values: $865,000.

Average unit prices in Sydney for 2023

Units offer a more affordable form of housing for those invested in the Sydney property market. While unit prices have fallen in 2023, they’re expected to decrease steadily compared to Sydney houses.

Sydney’s median unit prices declined by 1.2% in December 2022 to $770,000, and are expected to fall further in 2023. However, not as far as experts first predicted, thanks to an increased demand for units. This is partially due to the rise in Australian immigration, increased investor demand and activity, and interest from first time buyers looking to invest in a property while prices are falling.

Houses vs apartments in Sydney’s property market: Which is better?

So, are you better off buying a house or a unit in the Sydney property market?

It depends entirely on your needs and budget. While house prices falling is a good incentive for buying a Sydney home, unit prices will always be lower – around $200,000 less in Sydney alone.

If you’re already on the property ladder and value having a spacious home, then we would recommend buying a Sydney house. However, if you’re a first time buyer looking to get your foot on the property ladder, opt for a Sydney unit – at around $200,000 cheaper, you’ll have a better chance of finding affordable apartments.

The future of Sydney’s housing market

The future of Sydney’s housing market depends on the state of the Australian economy, with the RBA cash rate currently sitting at 3.6% but is expected to come to a halt later this year.

Increasing interest rates directly impact property prices since borrowing conditions become tighter, and fewer people invest in houses. If the RBA cash rate continues to hike, Sydney property values will fall further.

However, falling house prices do not mean the Sydney property market is set to crash. Instead, this is more of a house market correction – since house prices rose by over 27% between October 2020 and January 2022.

Interested in Sydney property? Let Lendstreet help you!

At Lendstreet, we understand the intricacies of the Sydney property market and are ready to advise you on your next property purchase. We offer a range of loans to suit house buyers, from first home buyers to investors.

If you’re ready to buy a Sydney property, contact Lendstreet today and find your next home. Alternatively, book a free consultation here or email us at support@lendstreet.com.au.

FAQs

How far will interest rates climb?

The RBA cash rate climbed significantly in 2022 and has reached 3.6% as of March 2023. Experts predict that the cash rate won’t go any higher than 3.6% this year.

Will the Australian property market crash in 2023?

No, it’s unlikely that the Australian property market will crash due to housing demand. However, prices will continue to fall throughout the year.

What are the average property prices in Sydney?

The average property price in Sydney is currently $1 million.

The post 2023 Sydney Property Market Outlook appeared first on Lendstreet.

Like the rest of the Australian property market, house prices have boomed due to the Covid pandemic and rising interest rates. However, the outlook in 2023 will see an end to rapidly rising house values, already going down by 6.4% since February 2022. We will also see a steady shift from a seller’s to a buyer’s market.

If you’re looking to invest in the Melbourne property market this year, here is a guide to the Melbourne real estate market in 2023.

Key Takeaways:

• Buyer demand will decrease, meaning Melbourne property owners could need to sell at a lower price.
• The median house price in Melbourne is still $147,000 above pre-Covid levels.
• House prices in Melbourne are still the third highest in Australia.

How will rising interest rates affect Melbourne?

Australians are seeing some of the highest interest rates in ten years, with the RBA increasing interest to 3.1% in December 2022. Because of this, the Australian property market is likely to take a big hit since buyers are less likely to make property investments due to mortgage costs. So, if property owners want to sell in 2023, they might need to lower their property prices.

The Melbourne housing market will likely take a hit, but less than other areas. According to experts, the Melbourne property market will fall to pre-Covid levels, having increased by 21% throughout 2020.

Will house prices rise or fall?

House values in Melbourne have already fallen by around 8% throughout 2022 but are still 10% above pre-Covid levels. In 2023, thanks to rising interest rates, Melbourne property prices are likely to fall further still, although by significantly less than other Australian property prices.

Despite Melbourne property prices falling rapidly, the median house price is still $147,000 higher than pre-Covid levels. Melbourne is still ranked the 15th most expensive place to live in the world, with many suburbs part of the million-dollar club.

Melbourne house prices are still the third highest in Australia.

What will the median house price be in 2023?

Rising interest rates will cause a significant decrease in Melbourne’s median house price, forecasted to fall a further 6% in 2023.

Experts predict the median house price will be $836,809, while the median unit price will likely sit at $719,400.

While property investors will likely take advantage of falling prices, the average buyer is less likely to buy a new home in 2023 since mortgage rates are rising due to interest rates.

House prices will likely fall to pre-Covid levels, however, the Melbourne property market will still rank as one of the most expensive in the world.

What will the rental market look like?

While the median house price is set to decrease in 2023, Melbourne’s rental market will likely reach record-high levels, having already gone up by 19 to 21 % in 2022.

Rent is rising at the fastest pace ever recorded, with one tenant in the CBD area claiming their rent has doubled, going from $330 a week in early 202o to $650 by the end of 2022.

Should I invest in the Melbourne property market in 2023?

Although Melbourne house prices are set to go down in 2023, the longevity of the Australian property market is strong. The property market will likely see a bounce back in coming years, and rent is set to increase significantly throughout the year, having already gone up by around 20%.

If you’re still unconvinced, here are the top reasons why you should invest in the Melbourne property market in 2023

Melbourne’s population demographics

Melbourne’s population growth is unprecedented, with over 4.9 million people making it their home – and it isn’t hard to see why. Melbourne holds the title of the world’s most liveable city. With stunning parks, coastal locations, and an abundance of restaurants, it’s a haven for Australians. The property market reflects this, taking on average 39 days to sell a Melbourne property.

By 2030, experts predict Melbourne will rank as Australia’s largest city, and Melbourne’s housing market will likely grow significantly as the Australian economy returns to a new normal.

If you decide to invest in a property in 2023, house prices will likely grow again in the future.

Melbourne’s transport links

Melbourne has fantastic transport links, meaning residents in the outer suburbs can easily reach the city centre. Because of this, house prices in these suburbs will likely grow as the area gentrifies.

Popular outer suburbs likely to see significant growth include Melton, Cobblebank, and Kurunjang, with median house prices sitting below $500,000.

The median house price in Melton is the cheapest in Melbourne, currently at $410,000.

Melbourne’s economy

More and more people are attracted to Melbourne due to the sheer number of new jobs available, with over 500,00 created in Melbourne over the last decade. Thanks to strong job growth, house prices will likely continue to increase as more people move to the city.

Need investment advice? Consult Lendstreet Mortgage Brokers

We are your trusted local mortgage broker, ready to advise you on the Melbourne housing market. We offer a wide range of loans, from first home buyer loans to investor loans and refinancing.

Contact Lendstreet and start your home buying journey today. You can also book a free consultation here or email us at support@lendstreet.com.au.

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FAQs

Is the Melbourne housing market changing?

Yes, but not as rapidly in other areas. Increasing interest rates in Australia is lowering buyer demand, and property prices are set to fall by 6% in 2023.

How high are interest rates in Australia?

Interest rates are currently at 3. %, predicted to rise to 3.85 % in June 2023.

Will property prices stay the same in Australia in 2023?

Due to increased interest rates, Australian property prices will likely go down in 2023. In the capital cities, it is unlikely that all covid-19 growth will be undone.

What are the lowest property prices in Victoria?

The lowest property prices in Victoria are in Melton, Kurunjang, and Melton South.

What are the highest property prices in Melbourne?

The highest property prices in Melbourne are in Toorak, Canterbury, and Kooyang.

Which capital cities in Australia are the most expensive to live in?

The most expensive Australian capital cities to live in are Sydney, Melbourne, and Brisbane.

What are the median property prices in the Australian property market?

The median house price of Australian property in the capital cities is $869,604.

The post The Melbourne Property Market Outlook for 2023 appeared first on Lendstreet.

The RBA cash rate will likely climb into 2023. Find out all there is to know about central banks, cash rates, and what the future holds for the Australian economy.

Key Takeaways:

• A cash rate is the interest rate a central bank charges commercial banks for taking out loans.
• The RBA cash rate has increased eight times over 2022, sitting at 3.1 percent.
• Experts predict that the RBA cash rate will increase continuously, hitting 3.35 percent by February 2023.

What is a Reserve Bank?

A reserve bank, or central bank, is an institution that regulates a country’s currency and financial policies, overseeing the commercial banking system.

This means that a country’s central bank has a monopoly and is the only institution that can increase a country’s monetary base and cash rate.

In Australia, the central bank is the Reserve Bank of Australia (RBA).

What is a Cash Rate?

A cash rate refers to the interest rate a central bank (or reserve bank) charges commercial banks for taking out loans. This directly impacts the interest rates that consumers are offered since commercial banks alter their interest rates depending on the changes made by a central bank.

If a central bank increases the cash rate, commercial banks increase their own interest rates for borrowing money. Alternatively, if the cash rate falls, commercial banks decrease interest rates, and spending and loan withdrawal will increase as a result.

So, if the RBA cash rate hikes, this will directly impact the Australian economy and our individual spending power.

The Australian Cash Market

The Australian cash market refers to the market for overnight loans taken out between banks.

Four main aspects of the cash market manage the Australian cash rate. These are:

Quantity

The amount of ES balances, or cash, which banks utilise to make payments to the RBA and to one another.

Price

The cash rate, or interest rate, in the Australian cash market used for overnight loans between banks.

Supply

The supply of cash currently managed by the RBA. Prior to the coronavirus pandemic, the RBA was able to supply enough cash to meet their estimated demand. However, post-covid, the supply of cash has forcibly increased.

Demand

The demand refers to the demand for cash from Australian commercial banks, stemming from the need to make payments. The RBA does this through debiting and crediting their accounts. To maintain cash levels, the RBA estimates the demand for ES balances each day.

Will the RBA cash rate climb?

The RBA cash rate increased eight times throughout 2022 and is more likely to increase again into 2023. As of 6 December, the RBA cash rate sits at 3.1 percent and has risen by 25 base points, putting it at the highest level since 2012.

This is due to a rise in inflation, which has increased by 6.9 percent since the beginning of 2022. A rise in inflation is due to global issues such as excessive spending by governments during the coronavirus pandemic, increasing energy prices, and the war between Russia and Ukraine.

It’s predicted that the RBA cash rate will hike to as much as 3.35 percent by February 2023.

Why does the Central Bank change the cash rate?

Central banks change the cash rate as a method to curb spending and, in turn, inflation. Since taking out loans becomes more expensive and the prices of goods and services increase, people are far less likely to spend money excessively.

Here are some of the main effects of a change in the cash rate:

Interest rates

A cash rate increase causes a hike in interest rates on deposits, mortgages, and loans.

Financial markets

If the spending power of businesses and individuals is negatively affected by a hike in the cash rate, the financial market will suffer, since borrowing is more expensive.

More savings account

Since people are less likely to borrow and spend, they’ll be more interested in setting up savings accounts in case of financial difficulties.

Price increases

Because individuals are spending less money, the prices of goods and services are likely to increase.

Don’t let the hiking RBA cash rate hold you back

Although the RBA cash rate will likely increase in the coming year, it doesn’t have to affect your personal finances. If interest rates are causing stress, check out our loan offers for peace of mind. Speak to a trusted mortgage broker about home loans and other financial advice.

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FAQs

What is the current cash rate from the RBA?

The current RBA cash rate is 3.1 percent.

Is the RBA going to increase the interest rate?

Yes, experts predict that the RBA will increase interest rates for commercial banks to 3.35 percent by February 2023. Interest rates could continue to increase next year, depending on global socio-economic changes.

How does the RBA change the cash rate?

The RBA changes the cash rate by buying and selling bonds in exchange for cash. Because of this, the supply of cash on the market changes and directly affects interest rates for commercial banks.
What happens when the RBA increases the cash rate?
When cash rates climb, commercial banks will react by raising interest rates for businesses and individuals in order to encourage them to deposit money in savings accounts rather than spending excessively.

Is it good if the cash rate goes up?

An increase in the cash rate is deemed negative for individuals and businesses since it becomes more difficult to secure loans. Spending power also decreases, while the cost of goods and services goes up as a result.

The post How High Will the RBA Cash Rate Climb? appeared first on Lendstreet.

No one wants to pay more towards their home loan than they have to. Read on to discover how to discover what the RBA’s increasing interest rates mean for you.

Key Takeaways:

• Rising interest rates could affect your mortgage repayments.
• The RBA predicts future interest rate rises.
• Speaking to a mortgage broker could help mitigate the impact of rate rises.

What do interest rates mean?

Anyone who borrows money will pay interest on the principal amount. When you take out a mortgage, you borrow a sum of money to buy a property you repay monthly over the loan term. Your mortgage payments include interest payments, which differ depending on your lender, circumstances, and the market rate.

The market rate, or cash rate, is a figure set by the Reserve Bank of Australia to maintain the economy. Lenders, banks, and financial institutions use the Reserve Bank’s cash rate to inform their interest rate. Lenders may increase home loan interest rates when the cash rate goes up, which drives borrowing costs up.

How much have interest rates risen?

Australian rates have steadily lowered each year since 2010. During the pandemic, the RBA decreased the cash rate dramatically to a record level of 0.1%. With low rates, many Aussies took advantage and borrowed large sums to buy houses or finance other significant expenses.

However, in May 2022, as we left the pandemic behind, the RBA increased the cash rate by 0.25% to 0.35%. Over the last seven months, the rate has risen to 2.85%. While this doesn’t affect every loan, it might affect you as a homeowner.

What does a 2.85% interest rate mean in monetary terms? Say you borrow $500,000 at a 3% interest rate over 30 years. Your 3% rate will increase by 2.85%, and you will pay more throughout your home loan’s lifetime.

Why have interest rates increased?

When economic growth slows, the Reserve Bank lowers rates to encourage household spending. However, when inflation hits (as we’re seeing now), the Reserve Bank will increase interest rates to encourage saving.

The global economy has undergone significant challenges over the last few years. The global pandemic slowed economic growth. In 2022, the Russian war in Ukraine and other global factors have driven inflation up. Other advanced economies worldwide have increased their official interest rate to combat rising inflation.

What do interest rate rises mean for homeowners?

The impact of rate hikes depends on your home loan type. If you have a fixed-rate loan, you won’t see the effect of changing rates until the period ends or you refinance. However, mortgage holders with variable interest rates will see a difference in their repayments.

A variable rate mortgage fluctuates with the cash rate. As the Reserve Bank of Australia lifted rates, homeowners will pay more monthly for home loan borrowing.

For instance, if the rate rises by 0.25%, a homeowner with a $200,000 mortgage tracking 1.5% above the cash rate will see their monthly payments increase by around $25 each month. If you have another 20 years remaining on your loan term, you could pay an additional $6,000.

What do interest rate rises mean for future home buyers?

If you don’t own a home yet but are considering applying for a mortgage, you may find the cost of borrowing is higher than before. With higher interest rates, lenders may not offer you as much money. Therefore, you might find that you have fewer options when house hunting.

You can increase your borrowing power in several ways, from improving your credit score to offering a larger deposit. The rate rise will improve your saving’s account interest to help you build a significant deposit. Speak to a trusted broker about your financing options and secure the lowest interest rate available.

Are there any advantages for homeowners?

While rate hikes may push up the cost of your mortgage, it’s not all bad news for homeowners. With borrowing costs more expensive, there is less demand for housing. Property prices have dropped 3.4% below their peak in March 2022. While first-time buyers can borrow less, their dream home might be far more affordable.

After record-high house prices in the last few years, many will look forward to lower prices with a more sustainable balance between buyers and sellers. If you wish to purchase a new property, speak to an expert Sydney broker about your options.

How can you minimise the impact of rising interest rates?

There’s not much anyone can do about the Reserve Bank of Australia introducing future interest rate increases. However, you can implement a few steps to make the period ahead more manageable.

1. Boost your credit score

Consider building your credit score to improve your creditworthiness. Borrowers with higher credit scores are considered less risky and usually benefit from lower rates.

2. Refinance

If you have a better credit score than when you first took out your home loan, you could consider refinancing your mortgage to get a more competitive interest rate.

3. Speak to a Mortgage Broker

A mortgage broker can help you secure competitive rates that suit your household budget. Book a free consultation with an expert at Lendstreet to find out your home loan or refinancing options.

Will the interest rate rise again?

Future rate rises are likely. The RBA Governor Philip Lowe has stated that he expects a further increase as the inflation in Australia is too high as is with other countries. Lowe stated earlier this month:

“The Board expects to increase interest rates further over the period ahead. It is closely monitoring the global economy, household spending and wage and price-setting behaviour. The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”

RBA Interest Rates

Hearing that the cash rate has increased might sound overwhelming. With tighter financial conditions and reduced household budgets, you might find it harder to get competitive rates on your mortgage. However, we can help you find the best rates for your situation. Speak to an expert mortgage broker today about your home loan options.

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FAQs

What is the current RBA interest rate?

As of 1 November 2022, the RBA cash rate is 2.85%.

How much did RBA raise the cash rate?

The RBA governor raised the cash rate by 0.25% as of November 2022. The RBA warns that the interest rate will likely go up again.

What was the highest interest rate in Australia?

In January 1990, the interest rate was between 17 – 17.5%. Since then, we’ve seen higher interest rates of 7.5% in 1995 and 7.25% in 2008.

The post How the Rising RBA Interest Rates Will Affect Your Repayments appeared first on Lendstreet.

• Average house prices rose 22% in 12 months last year.
• Greater price increases in regional areas due to ‘work-from-home’ initiatives.
• Forecasted 2022 house prices are breaking even.
• 2023 should see up to a 10% decrease in property prices.

Did you know Australia is in the middle of the third property price boom in its history? After two significant property market booms during the Twentieth Century, this third price surge took many industry experts by surprise.

Expecting to see struggling markets during the pandemic, Australia witnessed a 22% price rise in only 12 months. But, with interest rate rises and the continued expectations at the tip of the RBA, will the Australian housing market begin to slow down?

What has happened to the property market?

The property market across Australia has sky-rocketed! The Government has enticed potential homebuyers with attractive incentives, and some Aussies have a fear of missing out!

The pandemic has resulted in many people buying property outside of busy Capital Cities, and working from home in spacious locations.

This impact has made areas such as Perth and Adelaide hot properties, with prices continuing to show strength. Growth in Western and Southern Australia is currently continuing to boom, rippling across the regional areas.

Interestingly, prices in Capital Cities have bucked the trend. Despite some property price growth last year, rising prices in Sydney have slowed.

Are interest rates rising in Australia?

Interest rates have risen to a 0.35% cash rate, the first increase since 2010. The RBA has tried to maintain low-interest rates across the country even though inflation is rising. However, rising inflation will soon have a detrimental impact on interest rates, as the RBA cannot hold back much longer.

Home loan interest rates are also set to rise to a standard 4% at the end of the year.

Inflation is predicted to reach 4.5% very soon. Food and fuel prices are continuing to climb along with housing prices. The RBA are hedging their bets and hoping that record unemployment rates result in wage increases for many Australians.

What are the property market predictions?

Experts are currently predicting that the market will slow in 2022. Property price growth may only reach 1% towards the end of the year.

A steady decline may be witnessed at the start of 2023, with a 5% to 10% decrease in home prices. However, the outlook for 2024 is forecast to be a price decline of up to 15%. This may result in your property price receding to levels experienced in Australia at the start of 2021.

Will home prices crash in Australia?

Prices will start to fall and may even crash. Some industry experts consider a 15% decrease in property values to be a home price crash. Other leaders in the property market judge a 25% decline in value to signal a pure crash.

Predictions are all subjective, however. After all, not many property experts predicted the pandemic property boom!

Rising interest rates may mean that repayments and living costs become too expensive for some individuals. They may then delay purchasing a property for a while, decreasing demand and resulting in falling home prices.

Should I wait to buy a property in Australia?

Take advantage of the current Government incentives and buy a property today! Broker experts at Lendstreet will help you determine whether you are eligible for the Home Loan Guarantee Scheme. You could pay a deposit as little as 5%, or even 2%!

Waiting to purchase a house may mean that you are buying a home at a higher interest rate and with no discount incentives.

Contact Lendstreet today and discuss which home loan options suit your circumstances!

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FAQs

Are property prices rising in Australia?

In many areas of Australia, property prices are still rising! The outlier to this trend is in Sydney, where growth is currently minimal.

However, regional areas across Western and Southern Australia are witnessing continuous price increases. This is closing the gap slightly between the previous astronomical house prices traditionally seen in Sydney.

Will house prices fall if interest rates rise?

Yes, house prices will fall if interest rates rise significantly. This is because home loan repayments rise and become unaffordable for many people. Property demand declines, and then property price declines.

Fix a home loan deal now with Lendstreet before interest rates make your repayments unaffordable.

Can I still buy a property if the property market crashes?

You can still buy a property if the property market experiences a crash. A property market crash is when the price of most homes plummets and suffers a significant decline. Property can still be sold and bought, however.

Although, some owners may not wish to sell if they cannot get a good price for their property. You may also find home loan repayments higher than at present due to rising interest rates and inflation.

Buying a property now may mean that you bypass the interest rate and inflation rises, fixing a deal with your Lendstreet broker.

Schedule a call to one of our expert mortgage broker

Ask our expert mortgage brokers anything about home loans.

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The post Will Interest Rates Cause an Australian Housing Slowdown? appeared first on Lendstreet.

Sydney property prices are expected to continue rising throughout the following year, although perhaps not as steep a price growth as we saw in 2021. We’re seeing a trend in investment shifting away from the many inner-city suburbs to more regional areas of Sydney. Let’s look at the top Sydney Suburbs to invest in for high capital growth.

Ashfield

Ashfield is located in the Inner West, located southwest of the Sydney CBD – about 8k away. Vastly accommodating low-rise apartments, detached houses, and a few grand Victorian buildings, Ashfield has a deep cultural history.

Everything you could possibly need is within twenty minutes of the Inner West suburb, including shops, education, recreational and sporting resources, and many jobs. It also has excellent public transport.

The median house price is $1,590,000, while units are an average of $710,000. Weekly rental income for houses is about $650 a week, and the rental yield is 2.1% per year. You can expect about $420 a week plus a rental yield of 3.1% for units in Ashfield, making it a strong prospect for a growing investment property in Sydney.

Balmain

Only 5km west from the Sydney CBD, Balmain is an affluent area with a vibrant culture. It’s an incredibly popular place to live. Balmain is home to a trendy restaurant scene, pubs, cafes, stores, bakeries, and other day-to-day services. The suburb features a mix of affluent Victorian buildings alongside restored sandstone workers’ cottages. It’s a pretty hilly area, so one storey houses are in short supply.

The median price of houses in Balmain has steadily increased over the last five years by a capital growth of 19.49%, more substantial than many other Sydney suburbs. The average property price is $2,306,000 for a house, while landlords bring in around $875 a week. Unit prices are similarly affluent at $1,220,000 to buy and $650 a week to rent.

It’s a suburb high in demand among buyers, guaranteeing that any property investment will result in high capital growth.

Bardwell Park

With the new Metro line opening up Bardwell Park for property investors and renters, property prices in this Sydney suburb are expected to soar. Bardwell Park has good parks, schools, and spacious houses, making it an ideal location to rent out to families.

In the last five years, Bardwell Park has experienced a growth of 36.04%, with the median house price now at $1,610,000. The average weekly rental cost is $600, with an annual yield of 2.4% for houses.

With the expected increased growth as a result of the new Metro line, Bardwell Park is currently in high demand, further pushing up property prices. Securing a house in this up-and-coming area would definitely be a substantial property investment for the future.

Bexley

Bexley is an exciting new investment prospect on the South West Sydney property market. Situated directly south of the CBD and close to the beaches in southern Sydney, it’s got the best of both worlds. Home to an ethnically diverse suburb consisting of nearly 20,000 residents, it’s a newly popular suburb for many.

Currently, real estate in Bexley is cheaper than other similar suburbs, meaning that it has a strong potential to grow. In fact, we can see its price growth in real-time, recording an increase of 32% over 2020.

The current median house price is currently $1,335,000, while units cost $710,000. Although the growth rate is expected to slow in the coming years, we can expect it to be a sound long term investment.

Rental prices for houses are around $640 per week while units are $400. The average annual rental yield is between 2.5-2.9%. More than 23% of the Bexley population are renters – making it an attractive option for property investors. It’s not too late to get your hands on a property within this beachside suburb.

Coogee

A gentrified coastal suburb located southeast of the CBD, Coogee is another suburb that is seeing rocketing house prices as light industrial developments and infrastructure projects unfold. The South-East Light Rail project is one such endeavour connecting Coogee to neighbouring Suburbs and making it an attractive residential suburb for renters and investors alike.

However, Coogee house prices aren’t low. The average house price is currently topping $3,601,000. Investors bring in an average of $1,300 a week in rent. Unit prices are around $1,392,500, with rental income averaging $650 a week. It’s a very high demand market, and prices have steadily increased over the last five years.

Many property investors in Coogee make their start by adopting a negative gearing strategy. With strong rental yield and high prices, negative gearing might be considered the best option to make long term gains as a buyer in Coogee.

Cronulla

Cronulla is located to the south of Sydney. It’s close proximity to the beaches while maintaining a spacious atmosphere. With locals naming it “God’s Country”, Cronulla is a popular destination suburb. It’s home to stunning ocean views, breathtaking scenery, and contemporary architecture.

Property prices are lower than in any other established residential area, such as in the Northern Beaches or Eastern Suburbs. Demand is not much higher than the average in New South Wales at the moment, making it relatively easy to secure home loans for properties here.

The current median property price in Cronulla is currently $2,350,000 for houses and $810,000 for units. The average rental yield is 1.9% for homes and 3.2%. Investors in Cronulla never lack for renters, making this one of the best suburbs to invest in New South Wales. Plus, Cronulla has seen a compound growth rate of 5.5% for houses and 2.9% for units over the last five years.

Fairlight

Located north of the CBD, just a step from Manly Beach, Fairlight is one of the gems of the Northern Beaches. With easy access to the CBD via the ferry but plenty of space, it’s a promising investment opportunity and guarantees rental potential. It’s located in the perfect area, far enough away to be affordable yet still higher than the average Sydney house prices.

In addition, Fairlight is one of the best suburbs to invest in Sydney for units – the five-year compound growth rate is an impressive 7.3% for units. Average house prices are $2,525,000 for houses, $1,463,000 for units. The rental yield is between 2.3-2.5%.

The Fairlight property market is very high in demand. Property prices are expected to increase in the coming years as it becomes a gentrified suburb.

Kensington

Kensington is 6km to the immediate southeast of the CBD in the City Of Randwick government area. Nearby is Moore Park and Randwick Racecourse. The suburb is also home to the University of New South Wales and the exclusive Australia Golf Club.

If you’re looking for very walkable suburbs, then Kensington offers easy access to Bondi and Coogee beaches while also a short journey away from the Inner West.

The median household income in Kensington is $1498 a week, above that of the Australian median household income. Real estate is expensive in the area; however, rental yields are well-positioned to increase as the area is home to students. Therefore, vacancy rates are rarely that high.

The average property price is higher than that of surrounding suburbs, costing $3,312,500 to buy a house or $970 to rent. Units cost significantly less to buy. The average price is around $942,500, with a rental income of $485 per week.

Maroubra

Maroubra is significantly more affordable than its neighbours in the Eastern Suburbs. Located 10km from the Sydney CBD, it’s an attractive prospect on the Sydney property market with many green spaces. With a stunning beach and excellent public transport, Maroubra is suitable for all residents and the largest suburb in the area.

The median house price in Maroubra is $2,300,000 for houses and $905,000 for units. Property investors can expect to receive $900 a week in rental income for houses with a rental yield of 2%. Units can expect to bring in $550 a week with an annual yield of 3.2%.

Narrabeen

Narrabeen has the ideal combination of high rental income, capital growth, and access to beaches. An excellent location for families and professionals, Narrabeen boasts a compound growth rate of 10.9% for houses and 8.0% for units in the last five years.

The average house price is $3,775,000, units are $1,217,500. Rental income for houses is especially affluent in Narrabeen, costing renters $1,100 a week. With high demand among buyers and continued property growth, it’s a substantial investment opportunity for those that can afford to get into this expensive property market.

Key Takeaways

Purchasing property for investment in any Sydney suburb location is likely always to pay off – property prices throughout New South Wales show a trend of solid growth. Plus, with the relaxation of international travel, vacancy rates are likely to plummet. Our top choices to decide on are strong and stable suburbs that offer excellent investment opportunities.

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FAQ

Which Suburb Is Best for Investment in NSW?

There are many excellent suburbs throughout NSW, offering strong investment potentials for your personal objectives. From Ashfield’s rich cultural heritage to Fairlights unbeatable location, our top suburb choice guarantees a sound investment, high rental yield, and capital growth.

Bexley, Maroubra, Kensington, Narrabeen, Balmain, Cronulla, Bardwell Park, and Coogee are among the best suburbs to invest in.

What Is the Fastest-Growing Suburb in Sydney?

Riverstone-Marsden Park is the fastest growing area in Sydney, in the suburb of Marsden Park. As one of the outer suburbs in the northwest of Sydney, it was identified as experiencing a growth rate of 23.2% between 2017-2018. Other fast-growing suburbs include Bexley, Bardwell Park, and Cronulla.

Where Should I Invest My Property in 2022 Australia?

The ten best suburbs to invest in Sydney in 2022 include Ashfield, Narrabeen, Bexley, Cronulla, Bardwell Park, Coogee, Kensington, Maroubra, and Fairlights. Property prices throughout Sydney are expected to continue rising in 2022 and beyond. Interest rates are currently at an all-time low in Australia, making this year an excellent time to stive after your personal objectives: begin investing in property.

Where Are First Home Buyers Buying in Sydney?

The trend shows that first-time buyers are purchasing properties from the inner west suburb Rhodes, beachside Maroubra, and inner-city Darlinghurst and Surry Hills, depending on their financial situation. These suburbs boast all the same amenities and excellent locations as their neighbours, but first-time buyers can purchase properties at significantly more affordable prices.

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However, after a peak last March, prices are beginning to stabilise. We are starting to see some restrictions imposed on lenders and banks on home loan amounts in an attempt to reign the housing market back under control.

Similarly, rental prices have boomed as property values rise. However, rental properties are also dealing with an increase in vacancies. Empty properties struggle with the lack of movement seen throughout the coronavirus pandemic and the loss of international students or visitors who usually push up demand.

Yet, the forecast for 2022 is looking much brighter. Hopefully, housing affordability and supply will stabilise and become more accessible for first-time buyers. Similarly, with the relaxation of COVID-19 restrictions, construction sites are ramping up their capacity, and foreign investment might soon bounce back.

Sydney House Prices

Despite the impact of coronavirus, property prices have risen over the last year and continue to do so. Low-interest rates, post-COVID demand, and government intervention have kept housing prices on the up.

Peaking in March of this year, Sydney property values continue to increase steadily. National property prices rose by 1.5% in October, a similar increase as we saw in August and September. After a dip in July in Sydney, the median house value increased by 1.9%. This last month has seen asking prices go up by 11.6%, sitting at an average of $1,683,793 at the moment.

In addition, houses are doing better than apartments or units in Sydney. The best performing suburbs are currently Bellevue Hill (with a medium value of over seven million) and North Avoca ($1,466,568, up from $991,507 a year previously).

The growth in house prices arises as a result of low-interest rates and the desire to stretch our legs after repeated lockdowns over the last few years. Plus, government intervention has led to increased inflation.

Further growth is expected in the upcoming months into 2022.

Home Prices Peaked In March

Across the country, we saw house prices peak in March 2021. Rising to a national average of 2.85% in one month, March saw property value rocket. In Sydney, the average shot up by 3.7% within the space of four weeks, the fastest rise the area has seen in over thirty years.

The growth rate has eased since, but it is still on the up. Westpac projects prices to reach as high as 27% for the year. Strong demand for houses continues to outweigh property listings.

The surge is thought to be driven by owner-occupiers. Record low-interest rates, government incentives and household savings (from spending two years with limited freedoms) has pushed the median house value up and availability down.

However, experts predict that more properties will soon be available on the market as high prices attract sellers. Although, this still remains an issue for first-time buyers having to save up for a hefty deposit.

In March, economists predicted that regulators could impose restrictions or regulations to prevent the Sydney real estate market from getting out of control. However, as housing markets have stabilised slightly, no action has been taken so far.

Changes In Sydney Property Prices Over The Past Two Years

Research suggests that from the start of 2019 to the end of 2020, the average house price fell almost everywhere in Sydney, particularly at the beginning of the pandemic. However, falling house prices because of coronavirus were seemingly temporary. At the end of 2020, the prices rose again to a record high at $1,211,488 – over £13,000 above the last peak in 2017.

Since 2019, prices have risen in most Sydney suburbs, with Alexandria leading the trend with the highest growth of 30.6%. Marsfield, however, dropped 10.1% on the Sydney housing market. On the other hand, Blackheath and Palm Beach are the only two suburbs that have remained stable and showed steady growth in the last two years.

Other suburbs with minor price falls include Charmhaven, Hamlyn Terrace and Wadalba – largely on the Central Coast.

Since March, Sydney property price growth has steadily increased. House prices are now thought to be  $296,000 more expensive than they were in January, on average. Meanwhile, apartments and units have gone up by an additional $91,000.

Is This A House Price Bubble?

The UBS Global Real Estate Bubble Index 2021 has labelled Sydney’s housing market as an overvalued bubble. The research suggests that its value has increased from 0.88% in 2019 to 1.39% in 2021, after dipping to 0.75% in 2020. Any percentage above 0.5 is considered to be overvalued.

The problem with house price bubbles is that they are set up to fall. The rapid increase in prices results in rampant buying and speculation, leading to collapse. However, the report does not label Sydney as yet being at “bubble risk”.

While the drive in housing values rockets, younger people are locked out of the property market and creates economic risks. Owner-occupiers increasingly rely on lending and borrowing to finance their property purchases, as household income falls behind the Australian housing market. The rise in mortgage debt might induce an economic downturn.

Potential solutions could be to limit the amount lenders let buyers borrow. Earlier this year, New Zealand put restrictions on loan to value ratio; however, it is now looking at what further measures it might need to impose.

However, others contest whether Australia’s property boom is a bubble.

Sydney’s Housing Market: Policy Updates

Owner-occupiers do not just influence the housing market alone. House prices and price growth are also dependent on developers and policy changes.

Developer Contributions

Contributions from developers are causing inflation, preventing supply and affordability from reaching those with a lower income.

Sydney Restarts Construction Work

Since late September, the limits on construction sites have been lifted. Prior to the 27th of September, construction sites were limited to fifty per cent capacity if they had any unvaccinated workers. Now, however, all construction sites are allowed up to one person per four metres square, regardless of vaccination status.

This will help the housing market produce new, fast, and cheaper properties to stabilise property prices.

Soaring Housing Debt a Financial risk

The Reserve Bank of Australia warns that the rising Sydney property values and increasing household debt might risk Australia’s economy and financial system. Interest rates have been cut to a record low, at 0.1%, and the RBA suggests that they are unlikely to increase before 2024.

As already covered, new limits have been imposed in November to restrict banks lending home loans to potential buyers.

Sydney Rent Prices

Sydney’s rent prices have been increasing steadily year after year. As of December 2020, rent prices were an average of $540 for houses and $495 for units. Houses increased by 1.9%, while apartments dropped by 1% since 2019.

In 2021, however, apartment rental prices are rising again. Plus, the median rental price is $582 for all dwellings – the only place where rent prices are more costly than Sydney is Canberra. 

However, prices in Sydney have only actually increased by 3.2%. Whereas Canberra house rents are up by 7.3%, Perth by 16.7% and Darwin by 21.8%. The national rent increase is 6.6%.

Therefore, while Sydney has some of the highest rental prices across Australia, they have not increased as much as other areas of the country. In fact, only Melbourne has had a lower price change, with a drop of 1.4% in rental prices.

Sydney Residential Rental Vacancy Rate

Residential rental vacancies have also increased, however. As the impact of the coronavirus pandemic has taken its toll, there was less demand for residential rental properties as lockdown reduced demand and fewer international students visited. In September, the number of empty rental properties rose by 8.2%.

However, it’s also been suggested that the rental market prices are driven by a demand for bigger homes and lifestyle locations. People have wanted to move back into the centre of Sydney as the pandemic seems to subside.

Unfortunately, this makes it more difficult for first-home buyers trying to save for a deposit across Australia. Furthermore, when international travel resumes and foreign investment or expats are allowed back in the country, many rental properties could be pushed up in price once more.

However, there is no guarantee that overseas investment will settle in Sydney. We might see a shift to less traditional destinations, like southeast Queensland.

What The Experts Are Saying About Sydney’s Housing Market

Expert Eliza Owens from CoreLogic suggests that “looking forward, we could see unit purchases becoming more popular as demand is deflected away from houses simply due to affordability constraints becoming more pressing across the detached housing sector where values have risen substantially more than units.” 

She also stipulates that “also, with investment activity picking up, interest in the medium to high-density styles of housing could lift as investment demand has historically been skewed towards the unit sector.”

Finance writer Sarah Sharples projects that “Sydney will likely reach its worst housing affordability in a decade if prices rise further by a relatively small amount as low-interest rates are not enough to offset sharp house price gains.”

Meanwhile, Michael Yardney thinks that in 2022 property investors will begin “slowly understanding the risks associated with high-rise tower apartments in Sydney including potential construction defects, high vacancy rates, lack of scarcity, lack of capital growth, and the challenges of buying in buildings that are predominantly owned by investors, and often many overseas investors.”

Yardney also suggests that “real estate in Sydney’s larger regional locations, particularly in lifestyle locations like the Central Coast, the Hunter Valley, Wollongong, New South Wales south coast should perform strongly this year with beachside suburbs likely to outperform the wider overall market.”

2022: Forecasts much brighter

As we see the relaxation of pandemic restrictions and international borders open again, house prices might rocket to over $100,000 as a median price across Australia. In Sydney, the forecast predicts that house prices could increase 8% up to $1,370,000 by the end of 2022. However, the price increase is stabilising. 

Sydney homeowners are set to make more on their property than anywhere else in Australia—potentially as much as 3.5 times the property value in 2022.  

Units are not performing as well as houses and might continue to suffer into the following year. However, as their prices fail to soar as high as houses, they might make more achievable investments for first-time buyers.

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In Summary,

As we begin to find ourselves in a post-pandemic world, house prices are not necessarily getting any more affordable. The good news is that property values are stabilising. Hopefully, with further legislation and decreased demand (as no one can afford the sky-high prices), properties might start to fall without the house price bubble bursting.

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The post Sydney Property Prices – Current Trends and Forecast for 2022 appeared first on Lendstreet.