Our customers move out for many reasons, but nothing is as heartwarming as seeing a young couple move into their very first home. Sydney has its share of popular suburbs, but for prospective first-time buyers, choosing the right one can be a daunting task.
Getting through an entire conversation without mentioning property prices in Sydney is a rarity, so we want to share some suburb comparison strategies that don’t rely solely on having two six-figure incomes. Follow along as we break down some common real estate statistics, performance metrics, and insights to help first-time home buyers choose the right suburb.
Compare Monthly or Annual Growth
The starting point for many suburb comparisons will be the growth seen in property prices. Depending on the timeframe you choose to analyse, you’ll be able to make different inferences from the data that you’re provided.
For example, you could compare monthly growth over the period of a year to see if there were any dips, which could indicate a well-timed investment. In a different light, you could also compare annual growth over a decade to see what the trajectory of the property value might be in the coming years.
One of Sydney’s most promising suburbs, Rose Hill, has seen annual growth of 46.58% in 2017. The median property price increased from $767,500 to $1.125 million over the 12 month period, a very sizeable appreciation.
Analyse Rental Demand and Rental Yield
After various visits with multiple mortgage lenders, getting a “loan” from your parents, and trying to pull together that 20% down payment, you’ll soon realise just how costly the purchase of a home can be. Don’t forget that there is a positive side to property ownership – the income that it can produce as an asset. Looking at both rental demand and rental yield can be an exciting aspect of suburb research.
Rental demand is an indication of how popular a suburb is, often tied to vacancy rates and the number of property visits. Rental yield is the measure of how much income an asset can produce compared to the value of that asset, primarily a means to find out how quickly a mortgage can be paid off if it were rented out.
Both these performance metrics can help first time home buyers consider the investment potential of a property. Comparing performance data will be a balancing act, as arguments can be made for purchasing in high demand suburbs with similarly high rental yields and also for purchasing in less popular suburbs that are significantly cheaper.
With rental yields averaging around 3.8% last year, Liverpool in the outer suburbs exceeds expectations with a 4.5% rental yield, according to RP data. With median house prices still under the sub-million dollar mark, which is now becoming the rarity, Liverpool is a hotspot worth considering.
Invest in Future Infrastructure
Where infrastructure goes, so does the rest of the population. With urban sprawl spreading further out west, new satellite cities have become the boon in recent years. Chatswood, Hurstville, and Macquarie Park have all become prime examples of neighbourhoods that have established their sense of self, allowing residents to forego the commute to Sydney CBD. Being able to find gainful employment, excellent schools, and 5-star restaurants have led many to reconsider satellite cities for their own families.
The one common characteristic that has enabled these suburbs to explode has been the investment in future infrastructure. With property prices not yet at their peak, first time home buyers have a chance to take a calculated risk in the potential of a suburb rather than its current property price.
The Parramatta Light Rail Project for example, which was proposed in 2013, saw a significant portion of first time homeowners willing to take a risk and buy into the area. Parramatta has experienced unprecedented growth from these buyers, despite the expected completion of the project half a decade away in 2023. Homeowners and investors are taking a leap of faith with satellite cities, and infrastructure projects will continue to pave the way.
Read Suburb Reviews
Suburbs are living and breathing communities filled with life and culture. No amount of quantitative data can provide potential homeowners with the real sense of what it might be like to live in the area. Suburb reviews, however, like the ones hosted on Homely, can offer some real insight into a neighbourhood.
Hearing directly from residents who’ve lived there for decades or fresh tenants who’ve recently moved in, can provide alternative perspectives that don’t rely on trends related to the real estate industry. Instead, it can offer heartfelt retrospectives about growing up in the area, where to find hidden gems just around the corner, or worrying criminal trends on the rise.
We know purchasing your first home can be a big decision. Hopefully, some of the strategies outlined above can give you some indication as to which suburbs will make worthwhile investments heading into the future. Sydney property prices aren’t dropping any time soon, so we want to wish you the best of luck in finding that perfect home and maybe one day, you’ll be that young couple moving out, that we’ll get to perform an end of lease clean for.