Southwest Sydney houses predicted for positive prospects

Doron Peleg, CEO of RiskWise, said that the increase in growth was attributable to various upcoming infrastructure projects, such as the airport in Badgerys Creek, a $3.6 billion 10-year infrastructure plan and a study into the Western Sydney train line.

Positioned 30 kilometres away from metropolitan Sydney, the region has a property market that is showing signs of stability, has affordable houses by comparison to Greater Sydney and has median house prices of $874,000 that is set to rise.

“The Southwest delivered very strong property price growth over the past few years. RiskWise research shows that while the Sydney market has cooled, it is likely that houses in Southwest Sydney will enjoy moderate capital growth in the short term, and solid capital growth in the medium to long term, due to the growing demand for affordable housing across the Greater Sydney region,” Mr Peleg said.

“This price increase is largely a result of population growth due to growing unaffordability around the inner suburban areas such as in the Innerwest,” Mr Peleg added.

Building approvals in the Southwest Sydney region are currently at 4,234, and while generally high when compared to Greater Sydney, the demand for housing implies to Mr Peleg that they would be absorbed back into the market and not have much of an impact.

However, Mr Peleg admitted that the rental returns for houses at 3.3 per cent were low, but were still higher than Greater Sydney’s returns.

Units, according to Mr Peleg, while at a more affordable price of $481,000 and a low return of 4.1 per cent, posed greater risks to investors, as with an expected 5,017 new units added to the region in the next 24 months, which represents an apartment oversupply in the Sydney market.

“While units with a median price of $481,000 still offer relative affordability in what is an extremely competitive property market, particularly with forecast population growth, investors should be aware of the potential unit oversupply in some areas,” the RiskWise CEO said.

“It is possible that investors who purchase off-the-plan units will experience poor or negative capital growth in the short to medium term as the area absorbs this additional supply.”