Popularity of houses in lifestyle areas tipped to drive prices to record highs

As expected, areas attracting lifestyle buyers – including Byron Bay, the Central Coast (North Avoca, Terrigal and Wamberal), the Hunter Valley, Wollongong and the NSW South Coast – continue to outperform the wider market.

According to the latest quarterly Risks & Opportunities Report from Riskwise Property Research, houses are emerging as a preferred investment alternative, especially in those popular lifestyle locations.

As such, the low availability of stock of “quality assets” across popular areas in NSW is expected to yield double-digit growth for houses in Sydney and in most lifestyle areas over the next 12 months, with housing prices breaking record highs.

“Historically, there has been a strong correlation between movements in interest rates, investor activity and property price growth, and as we forecast last year, the correlation will reassert itself this year leading to strong price growth in Sydney and regional New South Wales, especially for family-suitable properties,” Doron Peleg, CEO of Riskwise Property Research, said.

According to Riskwise, some greenfield areas carry a higher level of risk for houses in the short term, due to an elevated level of supply.

“A prime example of this is Sydney-South West with the potential addition of 6,090 houses over the next 24 months, being a 5.7 per cent uplift on the established stock. However, while the short-term risk is elevated, over the medium to long term no dramatic price reductions are expected and houses still present a significantly lower level of risk than is associated with high-rise units,” the researcher’s findings read.

As for units, while touting a housing boom, Riskwise did not discount the popularity of “quality” apartments.

Instead, the researcher believes family-suitable apartments that are an affordable alternative to houses and units in popular areas, such as the Eastern Suburbs and the Northern Beaches, are likely to enjoy strong demand and material price increases.  

Riskwise, however, cautioned investors to the dangers of purchasing units in high-supply areas, noting that the risks associated with existing rental apartments has increased materially, particularly in areas such as the City and Inner South, Inner South West and Inner West.

“Young renters are more vulnerable to the increasing unemployment, and this is reflected in a sharp rise in vacancy rates not only in Sydney, but also across other CBDs in the country,” Riskwise said, adding, however, that the risk is likely to be mitigated over time with increased population.