Real Estate Expert
Sydney continues to offer one of the most appealing lifestyles of any city on the Asia-Pacific rim.
Image via Mcgrath Real Estate
Sydney is receiving rising global attention and is certainly on the radar of the world’s elite for its stable economy, proximity to Asia, world class health care and education, pleasant year-round climate and endless natural beauty including its magnificent harbour, pristine beaches and clean air.
It is ranked 11th out of 40 top cities that matter most to wealthy people – behind London, New York and Hong Kong but ahead of Paris, Frankfurt and Dubai, according to Knight Frank’s City Wealth Index.
With its melting pot of cultures, Sydney continues to attract new riches from Asia, with China overtaking England as our No 1 source of immigrants over the past five years, according to the 2016 Census.
The 2017 Global Wealth Migration Review tells us that Sydney is currently the globe’s No 1 hot spot for millionaire immigrants and more of the uber-wealthy are buying second homes here, with a 29% jump to 3,500 owners in 2016 alone.
The weight of demand for residential housing has separated Sydney from the rest of Australia in terms of property values. A strong economy, rising population and chronic shortage of housing coupled with low mortgage rates is keeping property prices rising.
We expect this to continue over the next few years albeit at a slower pace.
Sydney now has a median house price of $960,000 and a median apartment price of $717,000, according to CoreLogic-June 30, 2017. We appear to be at or through the peak of the boom, with the pace of growth slowing and auction clearance rates trending down in 2017.
Key factors cooling Sydney’s market include affordability, higher mortgage rates for investors and APRA-led restrictions on investor borrowings.
The prestige market, which operates on a different cycle, is experiencing rising demand from expats, foreigners and local buyers. Top end home prices surged 11.5% in FY17, making Sydney the world’s sixth best performing luxury home market on Knight Frank’s Prime Global Cities Index.
With prices rising, it has become tougher for young people to buy without employing non-traditional methods, such as rentvesting or using the Bank of mum and dad.
In June 2017, first home buying in NSW equated to just 9% of the market, well below the long term average of 17%, according to the ABS. However, stamp duty cuts introduced in July have had an immediate impact with 1,950 first homes financed in July, up significantly on 1,528 in June.
One of the most important NSW Government initiatives to tackle affordability is a long overdue cutting of red tape with development approvals and council rezonings.
Target areas for new supply include Burwood, Strathfield, Canterbury, Frenchs Forest, Riverwood, Seven Hills, Crows Nest, Turrella, Wilton and Westmead, among others.
The NSW economy is firing and provides a strong fundamental for continued home price growth in Sydney, where about a quarter of Australia’s national GDP is generated and where GDP growth is at its highest since 1999-2000.
A near record $72.7B in new infrastructure will be spent over the next four years in NSW, including the third stage of Australia’s biggest transport project, WestConnex.
WestConnex will bring western Sydney closer to the CBD, shaving 25 minutes off the Parramatta-CBD commute – a crucial benefit given more than half of Sydney residents will live in western Sydney by 2026.
Parramatta will be at the heart of this growth with the local council predicting 22,000 new jobs and a dramatic 18% increase in the local population by 2021.
Sydney is undergoing tremendous change. A rising global buyer base is bringing a new wave of demand, crucial infrastructure for our future is finally underway and governments are working to preserve a place in our market for young people and essential service workers within the communities they serve.