No Slowing Of Investors: Why The East Is On Their Radar

No Slowing Of Investors: Why The East Is On Their Radar

If there’s one type of property buyer to keep an eye out for in the east this year, it’s going to be the portfolio investor.

While there have been predictions landlords would be leaving the market to head to Brisbane and Melbourne for strong yields, there’s one type of property they can’t get enough of in Sydney – our blue-chip real estate.

In particular, the higher priced assets of the east that have proven hard to resist for home buyers and investors. Property prices surged over the last financial year, up 19% in Bellevue Hill and 23% in Woollahra, Domain Group data shows. This compares to 11.1% Sydney-wide, leaving the east with house prices far in excess of almost everywhere else in Australia. As one of the top performers over the property boom so far, one of the questions we’re all asking is: How much growth is left in the east?

This isn’t so easy to answer. It’s likely this year will see a continuation of prices growth – though not even the bank economists are anticipating a return to double-digit boom figures of 2014. What should be of more interest to investors considering the market right now is the long-term growth, as Sydney is still undergoing huge changes, population growth and transformation. If you are looking to buy anywhere in Sydney for capital growth, you have to be thinking about what the city is going to look like in the short-, medium- and long-term.

The big concern for property investors in 2017 and, undoubtedly, the next few years will be supply. In the western suburbs, particularly around hubs like Parramatta, there has been an extreme level of apartment development that has seen some speculate about an oversupply. Whether or not an oversupply will eventuate is another article entirely, but it’s unlikely we’ll see any oversupply over this side of Sydney.

Here in the east, homes are tightly held and development has been more restricted – it’s almost the opposite story to what we’re seeing elsewhere. And that’s despite the fact that demand continues to be strong, with open homes and auctions as busy as ever right up until the end of last year. Given investment fundamentals are all about the principles of supply and demand, this can’t be overlooked.

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Simply, there’s no more land being created in the east and we’re not building upwards at a rate that is satisfying those who want to move here. This has left the east in good stead for those who can afford to buy in, and has led to a greater diversity of housing types with older-style apartments, a few newer homes and many properties on larger blocks still available.

Of course, not all areas are created equal. Suburbs and properties with strong underlying drivers will almost always perform well. A rare view, a sizable block of land, a home in a desirable school catchment – these are features that have yet to let owners down.

There are also upcoming changes that have investors excited. It doesn’t take a crystal ball to make the educated guess that the south east light rail will push prices upwards, will make the area more attractive to renters and will drastically improve the Randwick precinct with additional accessibility.

The first auction weekend is yet to take place – it’s likely we will see the market ramp-up after Australia Day passes – but we’ll be watching closely to see whether the strength of last year really is set to continue.