Sydney Buyer Exodus or Redistribution? - March 2024

By Guest Blogger, Terry Ryder, founder,

hotspotting.com.au and propertyU

There’s no doubt that large numbers of Sydney residents are relocating to other parts of Australia. It’s been happening in significant numbers of the past decade and continues to happen today.

It’s a major part of the trend we have dubbed “the Exodus to Affordable Lifestyle”.

Rather remarkably, Sydney continues to grow its population through natural increase (more births than deaths) and through overseas migrants settling in the city. And its property market keeps delivering spectacular results.

I have to admit I’ve never felt that I truly have a grip on the dynamics of the Sydney market. It’s by far the most expensive capital city yet people keep buying homes there and prices continue to rise.

According to CoreLogic, the median house price for Greater Sydney grew 12% in the 12 months to February 2024, reaching close to $1.4 million. The median unit price increased 8% to $840,000.

PropTrack’s numbers are a little different – the median house price up 8% to $1.34 million and the median unit price up 6% to $795,000 – but likewise depict a market that’s growing strongly and is very expensive.

It’s also an expensive place to rent, with house rents rising a further 11% in the past year and unit rents increasing 18%. It costs $720 a week for the average house in Greater Sydney and $650 a week for the typical unit – and in near-city areas it’s a lot more.

In Balmain, median weekly rents are $1,000 for houses and around $800 for apartments.

On the Northern Beaches, the median house rent is $1,850 per week in Manly, with the median unit rent around $900 a week. At Palm Beach, where the median sale price for houses is above $5 million, the average house rents around $1,500 a week.

The big factor for Sydney is that so much of the nation’s serious wealth resides there.

Data from Pexa shows that around 30% of dwelling purchases in Sydney are cash deals, with no mortgage required. In some of the wealthier suburbs of Sydney, over half of all property deals are cash – at Darling Point it’s 60% of purchases and at Milsons Point it’s 64%.

At Milsons Point the median price for an apartment is $2.3 million, but almost two-thirds of buyers don’t need a loan to buy there. At Darling Point you pay over $3 million for the typical apartment, but most buyers pay cash.

So there are two quite opposite scenarios in play in Sydney. One involves the people with above-average wealth, many of whom don’t need to borrow to buy multi-million-dollar real estate. The other features people who find Sydney too expensive or too congested or have other reasons for wanting to exit the big city and find a different lifestyle.

Many among that latter cohort are relocating to regional New South Wales or to Queensland. Many of them are empowered by technology which allows them to work remotely. The

Central Coast has been popular because it’s more affordable, has a water-focused lifestyle and is still within striking distance of central Sydney.

Prices grew a lot in the so-called Covid boom, but there remain numerous suburbs on the Central Coast with median house prices in the range from $650,000 to $900,000. Gorokan is a waterside suburb where capital growth has averaged 8% per year in the past decade, but the median house price is still just $700,000, which looks pretty attractive to Sydney eyes.

In my day-to-day interactions with people involved in the real estate industry, I’m speaking to more and more people who have Sydney-based businesses which they run from acreage on the outskirts of the metropolitan area, or from a cattle property in regional NSW, or from their home in Newcastle, or from a dream lifestyle property in Bali or Thailand.

I’m also encountering younger people who work for Sydney-based organisations but can do their jobs effectively from a regional area or interstate.

And then there are those who want or need to remain in Sydney and become rentvestors. They rent in their desired location in Sydney and buy an affordable investment property interstate. That’s become more and more common.

I did a strategy session recently with a 20-something woman whose family is Sydney based and who wants to buy her first property, but can’t afford Sydney, so is considering an investment property in Adelaide or Brisbane.

Increasingly, too, we are seeing people solve their affordability problem by considering attached dwellings. This is a national trend, particularly in the biggest cities, with more and more people opting for units and townhouses because they prefer that low-maintenance, lock-up-and-leave lifestyle and/or they can buy affordably in their location of choice.

Because of rising demand, apartments are starting to challenge houses on capital growth, disrupting that dominant paradigm of real estate, that the land content means houses always outperform units.

In Lewisham in the Inner West of Sydney, the median prices are $2 million for houses and $900,000 for apartments. Price growth in the past 12 months has been 5% for houses and 13% for apartments. Median yields are 2.5% for houses and 4.2% for units. And units are selling faster, with average Days On Market of 62 days for houses and 40 for units.

Downsizers, lifestyle buyers, first-home buyers, migrants and investors seeking good locations with higher yields are among the buyer cohorts who are making this a trend worth watching in Sydney.

Change is a constant in real estate and the trends described in this article speak to some of the emerging factors that are turning long-held beliefs on their heads. Maybe the regions offer better prospects or perhaps an apartment can provide a viable alternative with good growth prospects.

It all presents a strong argument for seeking expert advice – and being willing to pay for it – before making big-money, life-changing decisions.

Engaging an experienced buyers’ agent is a sensible move, whether you be a home-buyer or an investor. The outlay is minor compared to the potential cost of making a poor choice in a dynamic market.

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