Sydney is Australia's most populous city and its housing sector offers
investors unique opportunities with the security that comes with
investing in a large and rapidly expanding market.
Property prices in Sydney have increased 25 per cent in the last four
years, during which many other housing markets around the world have
stagnated or even gone backwards.
The reason that Sydney's
housing prices have continued to rise is simple - more people want to
live there. Famous for its landmark Harbour Bridge and Opera House,
Sydney is the business and financial capital of Australia, with an ideal
climate and a relaxed yet cosmopolitan lifestyle.
Sydney
has nearly five million residents and its annual population growth rate
of 1.6 per cent is higher than the Australian average. It is also higher
than that of any major western city outside Australia, yet less than
half of this increase comes from births.
Most new
Sydneysiders are overseas arrivals who come to Australia to start a new
or better life, seeking employment or education opportunities for
themselves or their children. They have created a steady demand for
around 30,000 more dwellings each year, pushing up prices and making
Sydney the most expensive city in Australia to buy a house.
The median price of a Sydney house is now around A$620,000 (S$786,740)
and it is rising. Landed properties can be purchased on the outskirts
of Sydney for around half this amount, but they are located far from the
city centre. Sydney's idyllic harbour side location brings problems, as
much of the land is locked away in parks or reserves and there is less
available for housing. The urban footprint has spread as far south,
north and west as there is land available.
It is almost
impossible for overseas arrivals to buy a home until they settle and
establish themselves, which can take many years. This has led to a rise
in Sydney's rents, which are higher than any other major city in
Australia.
High rents and prices have changed Sydney's
landscape. They have led to the abandonment of the dream of a landed
home for many young Sydneysiders and led to a boom in apartment living.
Over half of Sydney's dwellings are apartments or "home units" as the
locals call them.
The new medium and high-rise apartment
blocks contain gymnasiums, swimming pools and garden barbecue areas. The
units are fitted out to attract renters, while their design lowers
maintenance costs for investors. Many of the suburbs where this
transformation is occurring - such as Pyrmont, Ultimo, Camperdown,
Double Bay and Broadway - are located close to the central business
district and in the urban centre itself.
What makes these
dwellings ideal for investors is that prices for home units are still
less than 70 per cent of those of similar sized houses.
The
Sydney inner urban market is unique because there are fewer development
projects in the pipeline than there are in other cities such as
Melbourne even as the rental demand is far higher. Rents in these areas
are escalating as a result and housing investors from Singapore can buy
off-the-plan units with confidence, knowing that both the rental yield
and the value of their investment are likely to rise in the coming
years.
