05.10.2023 Buying Tips

The Five Different Groups Buying Property In Sydney’s East

The Five Different Groups Buying Property In Sydney’s East

There are 5 key groups buying real estate in Sydney’s eastern suburbs.

We explore who they are, what they want and what drives them.

Sydney’s Eastern Suburbs is popular with a range of buyers, from first homeowners to downsizers. But they aren’t all driven by the same factors, at least not directly.

We look at what influences the five key buying groups in Sydney’s eastern suburbs and explore what and where they’re likely to buy.

1. Downsizers

It’s difficult to overestimate just how important downsizers have become to the eastern suburbs’ property market. In fact, in many parts of the eastern suburbs, downsizers have become the dominant buyer demographic.

What drives them? For downsizers, it’s all about lifestyle. Proximity to cafes, restaurants and public transport matters a lot. Because they’re often cash buyers, downsizers are usually not influenced directly by interest rates. However, indirectly rising rates have impacted what they’re likely to receive for their family home when they sell. This impacts what they can afford when they move on.

What they want to buy. Generally, something smaller than the family home that allows them to have a ‘lock up and leave it’ lifestyle. But that doesn’t mean cramped – three-bedroom places are often more popular with downsizers than two-bedders. Downsizers often also want single-level living, although this isn’t always the case. These days many downsizers also demand a touch of luxury.

Where they want to buy. All over the east, but some suburbs are prime downsizer territory, including Paddington and Woollahra, Potts Point and Double Bay. Many are also looking to the eastern beaches.

Main challenges. There simply aren’t enough properties for this important buyer segment, and new developments aimed at downsizers tend to sell quickly.

2. Upsizers

When the market rose to unprecedented heights in 2021, it was upsizers, or those looking for a larger property, leading the charge. Although they’re now a little quieter than back then, they’re still an important influence.

What drives them? Upsizers are affected by the health of the property market (especially when it comes to the value of their existing home) and, of course, interest rates. After all, it’s this demographic that often brings with it the largest home loans.

What they want to buy. As their name implies, it’s all about more space. Since the pandemic, that has often included room for a home office, as well as for a growing family. Over the past couple of years, many upsizers bought a home with renovation potential. Some even bought with the idea of a knockdown/rebuild. However, since construction costs have been rising and trades are harder to book, more are looking for the finished product.

Where they want to buy. No part of Sydney has been more influenced by upsizer activity over the past few years than the eastern beaches. For instance, it was upsizers that drove the median price in Bronte so high it became the top-performing suburb in the country. Upsizers are also very active in markets with larger homes and good blocks of land, such as Randwick and Rose Bay.

Main challenges. During the pandemic, the median house price in many prime upsizer areas soared. Even though they may have come back a little, they now have to contend with higher interest rates.

3. First-home buyers

First-home buyers have been relatively quiet over the last couple of years. But right now, we’re starting to see them come back into the market.

What drives them? Getting a foot on the property ladder is tough, and higher interest rates have made it tougher still. Weighing against this is a strong rental market, generous government subsidies and lower dwelling values (at least compared with a year ago). Together, these may have tilted the rent v buy equation in favour of buying for many.

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What they want to buy. First-home buyers come in a range of shapes and sizes, with many people delaying their first property purchase until their forties. Still, first-home buyers are most obviously active in the apartment market.

Where they want to buy. First-home buyers are becoming more of a force across the eastern suburbs, with places like Bondi, Bondi Junction, Centennial Park, Coogee, Randwick and Potts Point all popular.

Main challenges. Even though the gap between renting and paying a mortgage may have come down, saving a deposit can be tough. According to Domain, it takes 6 years and 8 months for a first home buyer to save a 20% deposit on an entry-priced house in Sydney. That’s not surprising when a 20% deposit on a $1 million property is $200,000.

4. Investors

Investors were also noticeably absent during the pandemic’s rising market. Since it cooled over 2022, they’ve been coming back. In fact, lending to investors hit a high in early 2022, according to ABS data, and despite recent falls is still tracking higher than normal.

What drives them? Return on investment. With prices rising and yields falling over 2021, many stayed away from buying property. Now, lower prices, rising rents and a growing population have made owning a Sydney investment property a much more attractive proposition again.

What they want to buy. While property investors come with a range of goals and budgets, most buy apartments with strong appeal to renters.

Where they want to buy. Properties near public transport, jobs, education and amenities are always in demand. That makes Paddington, Randwick, Coogee, Bondi, Rose Bay and Double Bay prime investor territory. They’ve also been snapping up units in Kingsford and Kensington thanks to the Uni, hospital and light rail.

Main challenges. While rents have increased, so too have interest rates. Balancing capital gains and yields is a priority for investors.

5. Prestige buyers

The prestige market remained strong even through 2022’s falling market, and it remains strong today, with sales records continuing to be broken right across the eastern suburbs.

What drives them? Unlike most market segments, prestige buyers remain largely untouched by interest rates. They’re more driven by factors such as the state of the economic and share market, as well as the relative strength of the Australian Dollar.

What they want to buy. Prestige buyers tend to want something unique, and properties in this category tend to be one-offs. If they’re not, you’ll find a lot of buyers in this category carry out extensive renovations to get exactly what they want. Some are prepared to pay whatever it takes to secure their dream home.

Where they want to buy. Traditionally, Sydney’s prestige property has been harbourside and parkside. Suburbs such as Centennial Park, Vaucluse, Bellevue Hill, Double Bay, Point Piper and Darling Point have topped the list. However, increasingly, beachside suburbs like Bronte, Bondi and Tamarama are now home to a larger number of Sydney’s most expensive homes. This includes luxurious penthouses as well as freestanding houses.

Main challenges. There simply aren’t enough homes to satisfy demand, and that can drive prices to astronomical levels.

Want more?

If you’re thinking of buying or selling in Sydney’s eastern suburbs, get in touch