A second home in Sydney
If you are looking to buy in the Harbour City, check out the suburb which are predicted to perform well this year. Helen Dalley reports
As property prices continue to plummet down under, investor interest, particularly from overseas buyers, is high. Falling interest rates, increasing affordability, rising rental rates, improving investment yields and a worsening undersupply of housing are all acting as market drivers. House hunters could do a lot worse than buying in Sydney, not least because there is a trend towards long-term renting, despite government initiatives to get prospective homeowners on the property ladder.
While property in Sydney doesn’t come cheap, there are financial sweeteners for investors. Darien Bradshaw, regional director of international properties, Colliers International, points out, “Individuals are subject to a 50 percent reduction of the taxable gain if the asset is held for at least 12 months.” Vacancy rates are under 1.25 percent, while rents are expected to increase by 50 percent over the next two to three years.
“Due to the chronic shortage of supply of property in Sydney, projects due for completion in 2009/2010 are selling well, such as The Hyde and The Village,” Bradshaw says. “These projects are off the ground already, and both are well positioned and present good rental potential for investors, particularly The Hyde, as it is so close to the city centre.” Prices have not yet been released but given the prime location they are likely to be in the top tier. By way of an example, a 5,380 square-foot, three-storey penthouse on Elizabeth Street, which is in the same district as The Hyde, recently sold for over AU$20 million (HK$103.5 million).
Swanky new apartment complexes aside, it’s worth taking a look at what’s on offer outside the Central Business District (CBD). Ultimo is situated just 2 kilometres from the centre and it is well and truly dominated by unit development. The rental market within the suburb is very strong due to the proximity to the CBD, the University of Technology Sydney and Sydney TAFE; the strength is reflected in the current average gross rental yield of 6.4 percent. Transport amenity is also afforded by the Sydney Light Rail Stations at Paddy’s Market and Exhibition System, and Sydney’s Central Railway Station is within walking distance.
In Chippendale, less than 3 kilometres from the CBD, the current median unit price at AU$372,000 shows strong relative affordability, especially for a suburb which is adjacent to Sydney’s Central Railway Station. The unit offering is varied
and includes older terrace and warehouses that have been transformed into units, as well as modern condos. As to be expected rental demand in the area is very strong due to its excellent location and proximity to a number of nearby universities and TAFEs. Retail amenity is abundant both within the CBD and in nearby Broadway.
Greenwich is a residential suburb on Sydney’s Lower North Shore just 4 kilometres from the CBD. It is strategically located close to major office markets and retail precincts, and Greenwich itself also enjoys elevation, which affords many properties excellent views. Greenwich units are generally older walk-up-style flats which, in most instances, have strong internal renovation potential and will tend to have lower body corporate fees. Train amenity is found nearby in the adjacent suburb, Wollstonecraft, and you can hop on a ferry to Circular Quay in the heart of Sydney.
Crows Nest, also on Sydney’s Lower North Shore, has its own retail and commercial precinct, while for ease of transport, it has its own train station and is bisected by the Warringah Freeway and Pacific Highway. The housing offering is dominated by federation houses and long-established cottages, most with significant character. The current median house price of AU$930,000 is substantially more affordable than most nearby suburbs where virtually all median house prices are above AU$1 million.
Though slightly further out, the suburbs of West Ryde and Granville are worth a look. West Ryde is located less than 13 kilometres north-west of the Sydney CBD, and has its own train station. The suburb is a well established residential area and the current median house price of AU$635,000 shows strong relative affordability when compared with surrounding suburbs. The housing offering is very diverse and includes federation homes, face-brick houses, fibro houses and cottages; the fibro houses and cottages, in particular, are likely to have strong renovation potential. West Ryde has its own retail amenity and is close to the growing commercial areas of Macquarie Park and Sydney Olympic Park.
Granville is one of the most affordable suburbs in which to purchase a house within 20 kilometres of the Sydney CBD, and the current median house price of AU$345,000 represents strong relative value. The suburb is located just minutes from Parramatta, which has an abundance of retail and commercial amenity. The suburb has a lot of smaller un-renovated cottages – renovation of these properties is a great way to add value and build equity. Granville also reaps the benefits of its own train station, and for private car access there’s the Great Western Highway and the Western Motorway.
There are clearly bargains to be had in and around the Harbour City, though as with any investment at this time, buyers are advised to proceed with caution. As Bradshaw says, “Due to the state of the market at the moment, it’s really important not to overstretch yourself and to be patient as well.” For more information on investing in Sydney, you can visit our sister website: www.realestate.com.au.
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