Best Suburbs to Invest Sydney 2020: UPDATED

It came sooner than a lot of property analysts expected. August 2019 showed a huge lift for Property Investment in Sydney. Take a review of the entire market overview and look at the best suburbs to invest in Sydney 2019 and beyond.

Sydney just saw the biggest national growth in median house prices up by 1.6% for August and it is making property investment in Sydney attractive again…..for those that can. Fuelled by changed buyer sentiment and 33% less advertised property than the same time last year. This article is an indepth look at the entire Sydney property market, including future prospects and the best suburbs to invest in Sydney 2019 and beyond.

It’s good news for those already in the Sydney property market but not so good for first home buyers or more beginner investors looking to break into the city. Investment in Sydney has been limited to the cash heavy or those already in the market and the momentary lowering of affordability seems to not be going any lower. The best suburbs to invest in Sydney 2019 are looking to run back up in price but that doesn’t mean it’s completely hopeless, you just might not be able to start out in Sydney. Sydney was the biggest winner across the country for August with a growth of 1.6% for the month but this means buyers hoping to capitalise on levelling affordability may have to look to other opportunities across the country. If you are interested in what Sydney has on offer across the board read on as we investigate the entire Sydney market including the best rental yield suburbs Sydney has and the best suburbs to buy.

August 2019 property index results demonstrating the best suburbs to invest in Sydney property investment. Already bringing returns, up 1.6% for August
Source: Corelogic

Big takeaways for the month:

  • the number of houses for sale this month is down by around 33% compared to last year driving up the prices with plenty of buyers rearing their heads
  •  buyer confidence returned thanks to a number of conditions including easing lending criteria and post election fears squashed
  • 3rd consecutive month of rises up 1.6% for August

Right on cue at the start of the month corelogic released their home estimation report which showed an unexpectedly high 1.6% ascension in the cost of residence in Sydney which was double the national norm. Sydney realtors commented that while the quantity of properties was diminishing there was no deficiency of potential purchasers which were out in droves.

In light of the good news for Sydney property owners we thought now would be a good time to do a complete overview of the Sydney market for the remainder of the year and see what opportunity exists if any for those of us that don’t have a spare million.

It’s important to recognise Sydney like all the nation’s capitals isn’t just one market, that’s enough talk let’s look at the numbers. Oh and this article is a big one, so feel free to jump to a particular section if there is something specific you’re chasing.

After Something Specific? Save Yourself Some Time

Investment in Sydney: Property Market Price Overview

Sydney Property prices are at the most affordable they’ve been since 2016 and after 2 years of drops are just starting to return to the positives. 

Four years ago Sydney cemented itself as one of the most expensive cities to live in the world breaking the $1 million median house price barrier. Just 5 years ago only six suburbs in Sydney had a median price of $2 million or above. A report back in 2017 released by Domain showed that number had jumped up to a dramatic 78 suburbs during the peak.

As of August the median asking price was back up to $1,280,000 according to the latest data from SQM research after an annual low in May $1,217,000.

Source: SQM Research

Investment in Sydney: Sydney’s Economy

Sydney’s economy is built on a rich combination of trade, manufacturing, finance, business, education and tourism. Boasting the largest economy in Australia built around the largest CBD with strong commercial areas in surrounding areas.

Sydney’s business and financial stronghold and is arguably the central economic hub of the Asia-Pacific region. Sydney created around a third of new jobs in Australia last year hitting over 50,000 new jobs and has one of the lowest unemployment rates in the country with a rate of 2.4% recorded in the ABS labour force survey and gathered from Centrelink data released in March 2019. 

Investment in Sydney National Unemployment Graph

Public sector demand is up 5.6% after an economic slump following the housing downturn. Sydney is also a tourist destination, which attracts tourists from Northeast and South-East Asia mainly.

The city comprises of highly skilled, multilingual population. Its strong economy contributes to low employment rates and growth of population. Inner-city employees averagely earn $888 weekly.

The economy in Sydney has seen a rise since the 2011 government change which saw high levels of infrastructure spending boosting the economy and bringing business and consumer confidence to the markets. 

The New South Wales economy was affected by the housing downturn which saw spending growth almost hault entirely however 93 billion dollars has been invested into new infrastructure across New South Wales which has been a large source of strength to the economy and helped lift public sector demand by 5.6% across 2019. 

It’s been clear the New South Wales and Sydney economy were affected by a national economic growth fall of 1.44% over the past financial year. However surging commodity prices have strengthened the economy with a surplus expected to be announced for the 2018/19 financial year.

Investment in Sydney: Sydney Property Trends

Since 2017, the Sydney property market has experienced the most substantial downturn in its history. Property values fell to 14.9% in Sydney. However, this trend is set to stabilize by the end of the year.

Even though pessimists feel that the market will not rise again, we are already seeing 3 consecutive months of rises. Such trends are normal; we should expect a bounce-back in the market, with the efficient and robust government in place, improvement in infrastructure, creation of jobs, and a strong economy.

Additionally, Domain economist, Trent Wiltshire predicts that the Sydney market prices are set to rise by 2%. Meaning, unit prices will rise to 4%, and house prices should exhibit a 5% increase.

Investors are also not shying away from property investment in Sydney. Statistics show that there is an increase in first-time homebuyers and an increase in the approval of home loans by 25%.

Sydney Layout and Demographics

Sydney has over 300 suburbs. The city is based on a coastal location, which borders the Pacific Ocean and the Blue Mountains in the west. Sydney covers a small area, though. The suburbs surround the city, each with its distinct features.

Sydney’s Mudge metropolitan area has 650 suburbs spread out over 70 km west 60 km south and 40 km to the north. The best suburbs to invest in Sydney according to the Real Estate Institute of New South Wales were Mosman, Dover Heights, Palm Beach and Vaucluse taken from data back in 2014.

Sydney is one of the most diverse multicultural cities, not only in Australia but also in the world. As of 2018, the city’s population stands at around 5.48 million with a growth rate of 2.05%.

Sydney’s also Australia’s most popular city which makes investment in Sydney incredibly prosperous and means that the best suburbs to invest in Sydney are numerous. ABS stats show greater Sydney which is everywhere from Central Coast to the Blue Mountains with over 5 million back in 2016 and the population in 2018 grew by 1.7 percent.

 Sydney’s median age is 35 years with an average household of just under 3 members And in the CBD is more commonly occupied by two adults without children with an average age of 32. 

Best suburbs to invest in Sydney Greater Sydney Map for Investing in Sydney

Sydney Infrastructure

Sydney has some of the best Education facilities shopping precinct and landmarks Australia wide attracting both residents and tourism alike. Mattresses near Sydney’s success has been it’s proximity to the world’s largest Harbour utilising fairies rail and roads to transit through the city.

Over an hour travel each way in Sydney is comment but light rail has been spoken about which could drastically change the way people move around in the city.

 Sydney also boasts the busiest airport in Australia with over 35 million passengers a year which is connected in close proximity to the CBD.  when looking for the best suburbs to invest in Sydney 2019 and beyond or investment in Sydney in general looking at developments to major highways and specifically the rail system is a key indicator as to which suburbs will boom in price.

Sydney Average Rental Yield

The median weekly rent in Sydney is $582. However, it has the lowest rental yields compared to other capital cities. By March 2019, the gross rental yields stood at 3.32%, which is a good rental yield sign for Sydney investors.

During this time, the vacancy rate also rose to 3.2%. Initially, vacancy rates were meager, and they ranged anywhere below the 3% mark. Besides that, the dwelling values dropped by 4.5%

Investment in Sydney Rental Yield
Source: SQMResearch

Sydney Capital Growth 

The benefit of investing in Sydney is there are dozens of small markets, which operate independently in terms of having their individual drivers. Each market also has its own supply and demand.

Recent studies show that the young demographic tends to desire the city’s lifestyle, and dwelling values tend to fall for the expensive housing in the city. However, experts note a rise in price for low-priced houses.

Compared to the average house price in 1993 which was $188,000, the Sydney property market reached its peak in 2017. Investment in Sydney has certainly been a prosperous venture with capital growth rising to more than $1 million in the last 20 years.

Sydney saw a 50% rise between 2010 and 2017 and has only fallen back 15% since 2017 which it has already begun to recover from.

Sydney’s Growth

Sydney has been battling with Melbourne to be the most populous city in Australia since the 70s.  Australia has one of the highest growth rates in the world and the majority of that population resides in capital cities. Since 2011 with a population of just over 4 million Sydney has grown by almost 1 1/2 million 25.48 in 2018 and is expected to continue to grow which makes investment in Sydney a worthwhile Prospect as the demand for housing continues.  the best suburbs to invest in Sydney 2019 and beyond are going to continue to push further and further out of the inner and middle rings bringing more value to the outer suburbs.

Ingleburn in Western Sydney Source: Domain

Best Suburbs to Invest Sydney 2019: North Shore

Sydney’s North Shore is divided into two, the Upper North Shore and the Lower North Shore. Both are unique suburbs with exciting characteristics. For instance, the Upperside usually is safe and is suitable for families looking to take care of the prestigious suburbs encompassing the area. Thanks to constant demand the Lower North Shore is certainly a sound investment option.

The lower North Shore, on the other hand, consists of families that live in Apartments and Units. It is also a densely populated area when compared to the North side.

Best Suburbs to Invest Sydney 2019: City and East

The area is the sixth-best performer in terms of auction rankings. City and East comprise of house units and apartments on small land parcels. Investors can get land here at a premium price. By the way, Australia’s highest property earners also reside here.

Apart from that, the suburb is a highly densely populated area with a demographic of young and single persons occupying most of this region.

Best Suburbs to Invest Sydney 2019: Inner West

The Inner West is an attractive hub for most homebuyers and investors. Most of them want to live here because of the Inner West’ gentrification that continues to attract high-income earners. The best Suburbs to buy in Sydney include Croydon Park, Enmore, Lewisham, Lilyfield, Newtown, and Annandale.

Investment in Sydney Overview:

The best buys in Sydney are going to be found in the inner and middle ring suburbs within 5km to 15km of the CBD. Due to being close to employment hubs, desirable lifestyle options and no further land suburbs in this zone will always be in hot demand.

Areas to Watch

Crows Nest – New railway under construction could be a huge shakeup

Lower North Shore

Inner West

For entry level investors or for those more cash flow orientated Sydney is potentially not going to offer the best results. Anecdotal evidence is reporting that the majority of entry, mid level or cash flow focused investors are looking to alternate markets including certain suburbs in Brisbane, Melbourne and Adelaide for properties offering higher yield than can be found in Sydney.