According to the latest report from Herron Todd White (HTW), investors seem to be losing interest in Sydney's inner ring, but first-time homebuyers see an opportunity to break into the housing market.
Matt Halse, local expert for New South Wales at HTW, said investor activity appears to have slowed down considerably in the region, especially in homogeneous medium and high density areas such as Haymarket , Zetland and Forest Lodge.
"This is in large part due to the drop in rental demand which lowers rents and therefore lowers overall returns," he said.
In Zetland, for example, the residential vacancy rate hit a record high in May at 6%, which fell to 5.7% in June. Mascot also recorded a high vacancy rate of 7.4%, according to figures from SQM research.
Halse said that the drop in rental demand in similar locations drives down rents, which ultimately impacts selling prices. It does, however, create an opportunity for first-time homebuyers to enter the market.
"It appears that more first-time home buyers are entering the market, which is helping to increase demand for some of the investment type apartments, however, there is still a supply. excess of apartments advertised for sale and for rent, "he said.
However, it is crucial to note that this trend is unlikely to improve anytime soon, given the impacts of COVID-19 on the general economy and the housing market.
Nonetheless, Halse believes investors should take advantage of available properties that are priced at or even lower than they were sold for in recent years.
"However, that assumes that someone can tolerate the reduction in rental income and 'come out of the storm' until the market starts to recover," he said.
Halse stated that the Sydney interior region would always benefit from its proximity to the central business district. He said the infrastructure, services and amenities the region has to offer could attract buyers and investors constantly.
In addition, the future Metro West and Metro City & Southwest lines may make the suburbs of the region more attractive.
"As always, we believe that the strongest long-term investment properties will be those that are well positioned, quality built and designed, low density developments, and stand-alone or semi-detached or older properties that have advantages for the renovation, ”he said.
Top suburbs:
Geelong West
,
Willoughby is
,
revesby hts
,
coburg north
,
Albion
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