Sydney continues to be one of the most appealing cities both to live in and invest in when it comes to property.
As a result, property investment in Sydney has been a very strong proposition over many decades. In fact, according to CoreLogic, house prices in Sydney have grown at 6.4% over the past 25 years making it one of the best-performed property markets in the country.
However, when thinking about buying an investment property in Sydney it’s important that you understand the type of investment you’re making and how it compares to other cities and even regional locations.
High House Prices
Sydney house pieces are the most expensive of any city in Australia. There are nearly 80 suburbs in Sydney that have a median house price of over $2 million, meaning that you’re going to need to have a high income to be able to purchase a property to begin with.
On the flip side, rents are also high, but yields are low. Generally, yields on houses are around 2.4 % while apartments are slightly higher. More often than not, a property investment in Sydney means that your overall expenses will exceed your rental income and your investment will be negatively geared so you’ll need to be able to make up any repayment shortfall from other income.
The other side of the house price equation is the fact that these prices are rising because demand is so strong. Sydney is a unique city in Australia, in that it is bordered by the sea, a river and a mountain range. What that means is that land is scarce, and as demand continues to increase so will house prices.
As a result, Sydney was one of the strongest performing markets during the last property boom and we are again seeing very strong house price growth in 2021.
One of the key drivers of Sydney property prices is population growth. Generally speaking, Sydney is one of two cities that see the largest influx of migrants from overseas, with many choosing it as their starting point.
It’s been the big reason Sydney’s population has ballooned to over 5 million people and its one of the important reasons why house prices steadily rise over long periods of time.
Blue Chip Suburbs
Sydney features some of Australia’s most well-known suburbs and these are normally very good investment locations. The Eastern Suburbs, Inner West, North Shore and Northern Beaches will always see strong demand and limited supply and as such have offered significant price growth over the long term.
Sydney, particularly the East, is the definition of a blue-chip property investment and over the long term, you can be pretty confident that values will continue to rise.