Although Sydney is still driving the New South Wales property boom, some of the city’s suburbs are falling behind.
In the year to November, Sydney was the only city to produce double-digit value growth – 13.1 per cent – according to CoreLogic RP Data. The next closest contender for that period was Melbourne at 8.9 per cent.
In addition, CoreLogic RP Data’s recent ‘Top 10 special edition housing market update’ – which focused on suburbs nationally with the highest median unit values – showed that the NSW capital still dominates in terms of price.
The list is based on the median value for suburbs that have had at least 100 automated valuation model (AVM) observations and 10 sales over the past year. Nine of the top 10 were Sydney suburbs, with Queensland's Tennyson coming in at number nine.
The top spot went to the small harbourside suburb of Dawes Point, adjacent to The Rocks, with a median unit value of $2,415,280.
With reports of soaring property prices in Sydney, some investors could be forgiven for thinking all suburbs are riding the same wave of growth.
Indeed, Louis Christopher, managing director of SQM Research, says that since 2012, there has been a pervasive misconception that all areas have done well in the property boom – but according to a recent report from the data house, this isn’t the case.
The report highlights the city’s worst performers, among them the northern beaches, which Mr Christopher says are handicapped by poor infrastructure. The report shows that while some suburbs in that region experienced price growth of 17.5 per cent in the past three years, this is significantly behind the 23.1 per cent total for Sydney.
Until there is solution to the Spit Bridge gridlock – which should ultimately be a second Harbour tunnel – this area is likely to underperform for the long term, Mr Christopher says.
SQM data reports that other underperforming areas include the lower north shore and eastern suburbs.
Mr Christopher said that a reduction in prestige, rather than a lack of infrastructure, caused house prices in the eastern suburbs to correct by over 20 per cent in 2011. Although the region has experienced 9.5 per cent growth over the past three years, SQM reports that expensive properties are still difficult to move.
Millers Point is a terrific place with a unique position in Sydney's historic Rocks district. People that live there feel as though they are part of an inner-city sanctuary.
It’s the only true community within Sydney’s CBD, with more residential than commercial property. Residents have everything the city has to offer right on their doorstep.
Millers Point’s desirable location has established an excellent rental market, both in terms of yield and tenant type. The influx of city professionals into the area is a sign that the demographic is undergoing a transformation.
Most of the properties are terrace houses and apartments, and while a significant proportion were public housing a few years ago, this is beginning to change. Those terraces are now being sold by the government for up to $2,000,000.
Since last year, there has been 25 per cent growth in the value of some properties, a market shift undoubtedly spurred on by the nearby Barangaroo development. Although the new office towers and casino are some years away from completion, both the headlands and the public spaces are almost ready. Barangaroo’s closeness to Millers Point will have a great effect on its community atmosphere.
There is a limited amount of stock, so properties that do go on the market rarely last longer than a few days. The government’s policy has involved selling much of the public housing and relocating the residents. Unfortunately, it has become too expensive for Housing NSW to restore and maintain 150-year-old properties.
With the aim of maintaining the area’s period aesthetic, the state has outlined strict development criteria for the terrace houses. Those with enough capital to renovate a Miller Point’s terrace could do well. However, I would also advise investors to consider one of the area’s apartments, which are proving popular with tenants and offer a high yield.
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