We Sydneysiders live on a unique part of the planet. The natural beauties of harbour and bushland combined with robust employment options have resulted in an internationally desirable destination.
Of course, along with this comes some challenges – and a big one is property prices. Domain are reporting that the city’s median house price now sits just shy of $1.5 million. In addition, the latest CoreLogic data shows house prices have risen more than 20 per cent over the past 12 months.
This unique set of circumstances means that for buyers, $1 million no longer throws open all options in the Sydney market. We must now look toward the $2-million-median suburbs and what they can tell us about rising demand.
So, how do purchasers who may not have that sort of budget still profit from markets at such heady price points?
Recalibrating the thinking
While $2 million is a lot of money, part of the puzzle on how to profit is one of mindset. The figure is a real psychological barrier for many buyers, but once it has been breached, the market becomes more comfortable with the new price level.
And that delivers a benefit for more ‘average’ buyers. You see, those who purchase the right sort of property at a more affordable price point will benefit just as much – perhaps even more – in percentage terms as those who acquire expensive real estate. This is because as a suburb’s market settles into its post-$2 million benchmark, bottom-end prices will be dragged up by the top end.
But key is choosing the right asset in these up-and-coming areas. Here are five suburbs I have spotted which are set to break the $2-million barrier, and the types of homes in their lower-price points that I believe will benefit most.
Leichhardt (median house price $1.760 million*)
Leichhardt is the very definition of a ‘bridesmaid’ suburb. Its neighbouring suburbs comprise $2 million-plus locations such as Annandale, Lilyfield and Haberfield. These areas are heritage conservation zones offering extraordinary lifestyle facilities and convenience services. Leichhardt purchasers can access all the same amenities at a far lower buy-in price… for now at least.
Leichhardt’s position just five kilometres from the CBD, as well as its excellent transport options, make it a winning choice. Purchasing anything with three bedrooms under $2 million here would be a great buy.
If your budget is tighter than this, then within the $1.6 to $1.8 million range a two bedder, with potential to add a bedroom, would hold great potential.
Alexandria (median house price $1.875m)
In my books, Alexandria should already be above the $2 million median. It is on the fringe of the affluent and highly desirable inner-east. This means Sydney’s best lifestyle suburbs, cafes and restaurants, and retail outlets are nearby. It is also within easy reach of the CBD.
It is important that buyers look in the right streets for their homes here. The ‘golden triangle’, as it’s known, or on Lawrence Street or Belmont Street are best – even if you must pay a little more for your home.
For $1.6 to $1.8 million, you could secure a two-bedroom terrace that would deliver excellent future upsides.
Rosebery (median house price $1.845m)
Rosebery is on the edge of the inner-east suburbs and is ‘gentrification central’. It is becoming one of Sydney’s trendiest centres which is an excellent indicator of future capital gains.
I have always considered Rosebery as a great alternative for family buyers who cannot afford Kensington. It has large family-sized homes priced around $2.5 to $3 million. The same style of property in Kensington would be $3.5 million to $4 million.
Stock is hard to find, although there have been two-bedroom semi-detached homes sold in the sub-$2 million mark and these should deliver excellent capital gains.
Summer Hill (median house price $1.9525m)
The village feel and community vibe of Summer Hill are highly attractive to buyers. The suburb also has great local shopping and other facilities, and the train can get you to the CBD in about 20 minutes.
As you can see, it is right on the verge of breaking the $2-million-median barrier. In fact, I believe it will occur very soon, and once that happens expect growth in lower-priced properties to gain momentum fast.
A small two-bedroom terrace that needed some renovation work would be your best option below $2 million. Location wise, buying south of Smith Street, north of Junction Road, east of Prospect Road and bounded by Lewisham and the Light Rail will yield the best long-term results.
Newtown (median house price $1.680m)
Newtown is already an extraordinarily popular near-city centre which has street-wise cache and a cool urban feel. King Street is lined with great cafes, restaurants, entertainment and hip retail outlets.
Newtown is also on the CBD’s doorstep. In addition, its vibe feeds off nearby Sydney University, while the Royal Prince Alfred hospital delivers a ready tenant base.
I also like Newtown because it is a city-lifestyle suburb. I believe it will bounce back strongly in this post-COVID lockdown period as businesses flourish and students and others return once more.
And it remains relatively price accessible too. You can still find a two-bedroom terrace at around the $1.5 to $1.6 million mark that will do well. My locational tip is to buy north of Alice Street for the best outcome.
Of course, having good local knowledge is essential, because as opportunities present themselves, you must be prepared to act fast. This is where having a well networked and thoroughly researched buyer’s agent is to your advantage. They can jump on the right opportunities at the correct time so you can enjoy capital gains into the future.
*All median house prices to October 2021 as per realestate.com.au suburb profiles