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Investors 'running out of time' in western Sydney suburb

By Jack Needham
8

The days of being able to pick up a property in Sydney’s west for sub-$500,000 are numbered, and investors are running out of time to get into certain suburbs, according to a buyer’s agent who has been closely watching the region.

Nick Viner, principal of Buyer’s Domain, had been researching the suburb of St Marys, located 45 kilometres west of the CBD in the City of Penrith, for a client with a budget of $500,000 looking to add a property to their self-managed super fund (SMSF). 

Prices in the west have surged, something which Mr Viner attributes to buyers moving away from the increasingly unattainable inner and middle ring, the confirmation of the Badgerys Creek airport development and the favourable attributes of key suburbs.

Mr Viner explained that the search turned to St Marys after finding that other investment hotspots, in particular Blacktown, had already risen beyond his client’s budget.

“Now it’s proving a challenging brief, because we probably missed the boat by about six months to get what they want, probably in the areas that they want. In fact Blacktown would have been probably first choice because it’s so well connected, it’s got the hospital, the university, the transport , the train, the M4 – it’s a really big centre out there in the western suburbs but I think the median now has jumped ,” he says.

CoreLogic RP Data figures up to 28 February had Blacktown with a median house price of $540,000 and a median unit price of $390,000.

“You won’t find anything rentable for half a million there [Blacktown] anymore, so we took the search further out west from between Blacktown to Penrith, including Penrith,” Mr Viner said.

The scale of this part of Sydney and the uneven distribution of public infrastructure means that buyers need to be mindful of the individual attributes of each suburb, he said.

“You know, there’s many more options out there but what you generally find is that there’s a number of suburbs that aren’t that well connected transport-wise and not on rail, and they’d be places like Lethbridge Park, Shalvey, Willmot, Blackett, suburbs like that, north-west of Blacktown. Now they have a lot of government housing and it’s hard for me to see that there’ll be any significant changes in suburbs like that very soon,” he said.

St Marys stands out as a well-connected suburb with several transport links, the primary reason for its increasing popularity with buyers, he said.

“We were trying to focus on St Marys because there seems to be a lot less government housing there, a lot more privately owned properties and it is much, much better connected because it’s on the rail, it’s on the M4, it’s on the Great Western Highway."

Recently released CoreLogic RP Data figures indicate that St Marys experienced a 14.47 per cent growth in median house prices in the year ending 28 February.

Mr Viner said investors and keen owner-occupiers were already driving up prices further and cited anecdotal evidence of houses selling within days of the first advertisement.

“There was a very small three-bedder. It was only on a block of 360 odd square metres which is unusual on a block that far out west – that’s the sort of block you’d get in the inner west – but there’s a pocket in St Marys near the shopping centre where the blocks are smaller. Now that had a price guide of something like $375,000-plus and that actually sold for $450,000.

"I mean it was in great location, but still that’s a very, very small block out that way. Still below the $500,000 mark yes, but you’re only sort of getting half the block for the money.

“Then the other one which surprised me was a two-bedder on the right-sized block – over 600 square metres – but it was only a two bedder and it needed a bit of work and the price guide was $375,000-plus. That sold for over $500,000 as well."

Mr Viner partially attributes the broader growth trend in the west to the announcement of the Badgerys Creek Airport development.

“I think there are a lot of investors buying out there, I think there’s a lot of renewed enthusiasm for the west. You know, the talk about Badgerys Creek, and that sort of slowly becoming more of a reality than it has probably ever been is really helping and there’s a few other major infrastructure changes going on out there as well.”

This, combined with the push factor of inner-city prices, means that the days of sub-$500,000 entry into the market are numbered, he said.

“I guess, when you look at it, the $500,000 price point is a popular price point for both people looking for homes in that sort of market, but also investors and therefore the pressure is really on for people to still be able to find a house that they can rent out and buy a decent block of land in Sydney for under $500,000.

"I think the reality is that the chances of finding something anywhere decent in Sydney for up to $500,000 - proper houses on a decent block of land – the days are numbered. The days are literally numbered as to how much longer that will be a possibility.”

Mr Viner believes that St Marys still represents good-value buying, considering that surrounding suburbs are bereft of its transport connections and sophistication and the inner-city is showing no signs of a slow-down.

Asked whether the level of growth in St Marys was sustainable, Mr Viner would not be drawn on a definitive answer but did provide a general overview of where he saw the Sydney market heading.

“I think the rate of growth we’re on at the moment has inevitably got to slow down. We were on about fourteen, fifteen per cent in Sydney last year and if the growth rate slows down to two or three per cent it will feel like a price drop but the reality is that for the good properties, providing you’re not buying something that can’t be sold, you’re still getting turnover of two or three per cent per annum,” he said.

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