The impending reopening of New South Wales borders to interstate and international travelers would provide much-needed boost to the Sydney unit market.

According to the latest BuyersBuyers report, the revival in housing demand in Sydney is likely to skew towards the unit market given the recent tightening of the mortgage interest deduction and growing concerns about affordability.

Doron Peleg, CEO of RiskWise Property Research, said potential buyers in Sydney would be looking for family-friendly units and other attached properties as a more affordable option.

“The price differential between houses and units in Sydney has never been greater, and the deposit gap will push more buyers into units,” he said.

A recent report from CoreLogic showed that: Sydney markets have significant price differentials for units and houses, spelling problems for unit owners who are planning to upgrade and buy a detached house.

For example, units in Strathfield, which make up 64.6% of the housing stock, have a median value that is only 23% of the median house price.

Mr. Peleg said that the wider the price gap, the more likely that family-friendly units will see strong price increases as these units provide an excellent advantage given their average price.

“Boutique developments without facilities such as elevators, a swimming pool or a gym are likely to outperform due to strong demand from investors, downsizers and affluent professionals seeking low-maintenance and comfortable housing,” he said.

Investors in the suburbs of Sydney should consider:

The BuyersBuyers report identified 18 Sydney suburbs that property investors should consider if they want to take advantage of the likely surge in demand the reopening will bring.

According to the report, the eastern suburbs are expected to be a bright spot for those seeking growth potential. Units in suburbs such as Vaucluse and Bellevue Hill, particularly those in the $1 to $1.4 million price range, are expected to perform strongly once the borders reopen.

“Average unit prices in the $1 million to $1.4 million price range, with a high land-to-asset ratio available for boutique unit purchases, are relatively more accessible to the rapidly growing cohort of investors,” said Peleg. .

The unit markets in the more affordable suburbs of Strathfield, Summer Hill and Croydon, all of which have median prices below $800,000, are also expected to be top performers.

“There is also a range of suburbs on the north coast and in the northern beaches, which look attractive in terms of unit price to home, including Mosman and Cremorne, and some of the other prime locations,” said Mr Peleg.

The BuyersBuyers report identified 18 Sydney suburbs that property investors should consider if they want to take advantage of the likely surge in demand the reopening will bring.

High quality unit targeting

BuyersBuyers co-founder Pete Wargent said the reopening of the borders would be a “sugar hit” for the local economy and provide better prospects for Sydney’s housing market.

“After a prolonged period of increased rental vacancy in the CBD and immediate area, things will tighten in 2022 as new entrants fly in, and the rental market should strengthen from here, especially for short-stay rentals,” he said. .

However, he urged investors to still exercise caution in the current market conditions.

“Buyers should ensure that they are purchasing a high-quality property with no significant issues, neither with regard to the location of the property, nor with regard to the specificities of the property,” he said.

“While there is currently excellent demand for almost all homes, at a later date, under ‘normal’ market conditions, the demand for Class B homes will not be as strong as the demand for top quality homes.”

Photo by Dan Freeman on Unsplash.



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