City proximity is key

Isobel King

24 September 2011

Most of the growth has been in the inner ring, with some suburbs achieving 25% growth.

Apartments are the most affordable entries to Sydney's pricey property market and, despite the turbulence this year, their values have held up remarkably well.

It's almost a reverse of what is seen in the market for houses, with suburbs on the affluent lower north shore and city/east performing the strongest for apartments in the mid-price bracket. In all markets, however, the top end has struggled to achieve the same heady prices of previous years.

For those on a tight budget, pockets in the city ring continue to show excellent capital growth; you can pick up a two-bedroom unit with parking in these areas for less than $400,000.

City-east

Apartments close to the city, and preferably close to the water, remain in hot demand, with Edgecliff, North Bondi, Paddington, Potts Point, Surry Hills and Centennial Park performing well. The director of Ray White Double Bay, Craig Pontey, attributes this to a mix of factors. Rising rental returns are attracting investors burnt by the sharemarket, while others are shedding property to reduce debt.

He says a lack of new stock keeps existing units in high demand, with anything less than $1 million fair game for first-home buyers. Empty-nesters who are downgrading to be close to the city also drive demand.

Investors and first-home buyers account for most of the growth in the more affordable eastern suburbs such as Eastlakes and Hillsdale, says Century 21 Maroubra principal Paul Karasalidis, who has sold property in the area for 23 years.

''You can buy a similar two-bedroom unit in Hillsdale for between $380,000 and $420,000 that you'd pay $550,000 for in Maroubra,'' he says. Exorbitant inner-city rents are encouraging more people to buy, even if it means moving a couple of suburbs further on.

Isobel King

24 September 2011

Sydney Morning Herald