Investing In Sydney’s East: Top 10 Suburbs For Capital Growth & Rental Return

Property in Sydney’s eastern suburbs is a safe bet for any investor.

But within this sought-after market, there are areas that show particular strengths depending on your investment goals. There are also important differences to consider in terms of how houses and units perform.

Best locations for high rental yields

If you’re planning to buy an investment property to rent, you may be focused on finding an inner city apartment to appeal to tenants who work in the CBD. But some of the strongest areas for rental yield are actually slightly further away from the city centre: Harbourside areas like Watsons Bay, Potts Point and Elizabeth Bay for houses, along with Darling Point and Point Piper for units.

Strongest areas for capital growth

For long-term investors, top performer Waverley continues to show compelling double-digit growth over the six-month period for both units and houses. Bondi Beach and Point Piper are performing similarly well for those looking to invest in houses to rent, while units closer to the CBD in Paddington and Darling Point are also providing strong rental yields.

By the numbers

CoreLogic’s 2016 ‘Best of the Best’ report brought together data showing growth and rental yield across Sydney. Here’s a look at the top 10 suburbs in the east by six-month capital growth and rental yield.

Top 10 suburbs for six-month growth – houses

1. Bondi Beach: 23.8%
2. Waverley: 18.2%
3. Point Piper: 15.6%
4. Darlinghurst: 11.8%
5. Surry Hills: 9.5%
6. Bondi: 8.7%
7. Paddington: 8.4%
8. Bondi Junction: 8.2%
9. Double Bay: 7.7%
10. Rose Bay: 7.1%

Top 10 suburbs for six-month growth – units

1. Waverley: 23.8%
2. Paddington: 23.6%
3. Darling Point: 18.0%
4. Potts Point: 14.3%
5. Rose Bay: 14.1%
6. Bondi: 13.5%
7. Bronte: 12.6%
8. Centennial Park: 10.3%
9. Woollahra: 10.2%
10. Coogee: 7.7%

Top 10 suburbs for rental returns – houses

1. Potts Point: 4.6%
2. Elizabeth Bay: 4.5%
3. Watsons Bay, Vaucluse, Bronte, Waverley: 4.3%
4. Bellevue Hill: 3.6%
5. Rose Bay, Centennial Park: 3.3%
6. Darlinghurst, Surry Hills, Coogee: 3.1%
7. Kensington, Bondi, Bondi Beach, Tamarama: 3.0%
8. Double Bay, Woollahra, Bondi Junction, Queens Park, Dover Heights: 2.8%
9. Paddington, Centennial Park: 2.6%
10. Darling Point, Point Piper: 2.5%

Top 10 suburbs for rental returns – units

1. Darling Point, Point Piper: 8.1%
2. Double Bay, Bronte, Waverley: 5.2%
3. Elizabeth Bay: 4.8%
4. Bondi, Bondi Beach, Tamarama: 4.6%
5. Woollahra: 4.5%
6. Darlinghurst, Surry Hills, Dover Heights: 4.4%
7. Watsons Bay, Vaucluse: 4.1%
8. Rose bay: 3.9%
9. Potts Point: 3.8%
10. Randwick: 3.6%

Combine research with expert advice

While these figures are a useful guide to recent market trends, this kind of data can only ever show part of the picture for investors. It’s important to seek advice from an experienced real estate agent to understand the particular benefits of each property.

To talk about your options, get in touch with our team today.

* All median price values are based on CoreLogic’s data and are based on sales within that suburb for the preceding 12 months. You can read CoreLogic’s 2016 ‘Best of the Best’ report here. Data concerning vacancy rates and rental yields are courtesy of SQM Research and is based on postcode rather than suburb. Vacancy rates are for May 2017 and Rental yields are the Property Gross Rental Yield for June 2017.