Investors Returning To Sydney's Eastern Suburbs

The impact of investors on Sydney’s housing markets is sometimes missed, as sellers tend to imagine residential owner-occupier buyers when they sell their own home.

But investor influence is a significant factor in the way the market moves. In the eastern suburbs, we’re now starting to see signs of renewed investor activity and good reasons why sellers should keep investor activity in mind.

Are investors returning to the market?

We’re already seeing signs of renewed investor activity in some of the key markets across Sydney’s eastern suburbs – a trend that seems likely to continue as we move further into 2018. Part of the reason for this is that Australia’s major banks have dropped their mortgage rates, luring in previously wary investors.

New property developments are the major exception to this boost in investor interest. Buyers who are focused on reliable, long-term capital growth are less likely to risk investing in an area of the market that is exposed to issues such as oversupply and quality control, so property developers will need to show evidence of higher building standards to attract them. While it doesn’t apply to every new development, this is still good news for sellers who can offer established units, especially in desirable inner-city locations such as Surry Hills, Darlinghurst and Paddington.

Will Sydney property prices continue to fall?

With Sydney’s average house prices down 2.1% in the 12 months to March, prospective buyers could be forgiven for expecting to find a bargain in the coming year and prospective sellers may be wary of listing their homes in what appears to be a falling market. But according to CoreLogic’s latest Hedonic Home Value Index, the rate at which property values are declining may have already passed its peak.

In fact, last month’s decrease for all dwellings was just 0.29%, with houses down 0.47% and unit prices actually increasing by 0.10%. CoreLogic says the unit sector is “consistently outperforming the detached housing market”, reflecting the pressure on first-time buyers who are now prepared to swap houses for units and pay more to secure their own home.

Investors are focused on long-term trends

It’s useful to remember that these short-term price corrections are only one piece of the puzzle. Informed investors will be looking at longer-term capital growth trends as they make their buying decisions, as well as factors like lending rates and government housing policy. Our eastern suburbs investor dashboard can be a useful tool for those looking to make informed decisions about investing in Sydney’s east.

What does this mean for Sydney’s east?

The hotly contested activity of the last few years has not been easy for Sydney buyers – particularly those trying to break into the market. As we head further into 2018 it seems many months of continuous prices rises might finally be tapering off, creating a more level playing field for both buyers and sellers alike.

But an easier market is highly unlikely to devalue the blue-chip markets surrounding the CBD, harbour and eastern beaches. The fact that price falls may have already started to slow across Sydney suggests that values in the eastern suburbs will remain largely protected as the market cools.

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