Six property experts reveal their Sydney investor hotspots for 2024

The Sydney property market has undeniably become unaffordable to many, with a median dwelling value $300,000 above the next highest median, Canberra, and almost $400,000 above Melbourne’s.

But like all city property markets, it is a diverse real estate landscape with its mix of sour lemons and appetising fruit cocktails awaiting property investors.

Despite its wince-inducing median dwelling value of $1,139,375 the city as a whole last month still notched up another 0.3 per cent price uptick, according to CoreLogic.

With price trends still in the positive, some suburbs are still delivering the type of capital growth, complemented by high rental returns, that captures the attention of property investors.

Houses remain the preferred investment vehicle but unit prices have been outstripping houses in recent months.

PropTrack’s Senior Economist, Eleanor Creagh, on Friday (11 April) said that in Sydney, six of the top 10 suburbs where unit growth is outpacing house price growth this year are in the Inner West, Inner South West, or City and Inner South, namely Dulwich Hill, Mortdale, Rozelle, Bexley, Balmain and Petersham.

Of all the suburbs in Australia, the house price premium over units is the most extreme in Clontarf, Queens Park, Bellevue Hill, and Vaucluse, in Sydney's Northern Beaches and Eastern Suburbs. In these suburbs, houses can cost almost 10 times as much as units, with the difference in value ranging from $3 to $8 million.

So where should property investors turn their attention in Sydney?

Six property experts spoke to API Magazine and shared their thoughts on the suburbs that offered the best prospects for medium-term return on investment.

From the top end of town to more affordable outskirt suburbs, here are the suburbs they think will have investors sipping cocktails on the beach in the future.

Sydney’s 2024 property investment hotspots

Aaron Downie, founder and buyers agent, Mackenzie Property Group

The East, Lower North Shore, and Northern Beaches could potentially see above-average capital growth

Suburbs like Coogee, Neutral Bay and Curl Curl really stand out. These areas, with median house values in the $3m to $4 million range, are known for their quality of life, access to amenities and strong demand from families, professionals and investors, which may drive property values up.

I anticipate units to continue outperforming in the Sydney market, driven by an upturn of investor interest, as well as by downsizers and those preferring the lifestyle Sydney offers over relocation alternatives.

Allen Habbouchi, Head of Project Sales & Distribution, aussieproperty.com

Sydney’s top three suburbs likely to keep delivering stronger than normal trends are Coogee, Kingsford and Kensington.

This is mainly due to their strategic positioning within 10km of the CBD, university campuses, beaches and infrastructure.

They offer lifestyle and investment opportunities to residents and investors alike.

Ultimately these factors could potentially contribute to deliver stronger than expected growth for houses and units.

Michael Martin, buyers agent, Investment Window

It is among first home buyers who will be active in the more affordable sub-$1 million bracket where we anticipate above average price growth over the next year.

Locations like Liverpool and Campbelltown are already seeing 17 per cent annual increases in searches and this renewed interest will flow on to higher prices with the increased demand.

Much of the outperformance of the luxury end of the market has been due to the immunity of that segment to interest rate rises compared to the lower quartile. With the rate cuts now priced into rate market into the end of the year and start of 2025, we expect some of the serviceability constraints and buffers to ease.

Five Dock is also a suburb seeing a lot higher search volumes, in Sydney’s Inner west, where the Sydney Metro West project station is underway, which will enhance its already good transport links. It is close to the CBD and is relatively affordability compared to other nearby locations.

The Agency, CEO of Real Estate, Matt Lahood

Sydney’s price trajectory is slowing due to high interest rates and people having less disposable income. People don’t have the borrowing power of previous years, which is reducing the rate of growth.

The most likely places to resist this price pressure are Alexandria, Burwood and, on the Central Coast, Kincumber.

Liam Carmody, General Manager, Palise Property

Despite the significant median price difference compared to other capital cities, outer suburbs in Sydney may not necessarily be the best performing.

This can be attributed to various factors, including infrastructure, amenities, employment opportunities and lifestyle preferences. 

Inner suburbs often offer better access to amenities and employment hubs, attracting higher-income individuals willing to pay premium prices. 

Additionally, limited supply and high demand in inner suburbs contribute to price growth. In contrast, outer suburbs may have more affordable housing but lack the same level of amenities and infrastructure, resulting in comparatively slower price growth.

Three suburbs positioned to deliver stronger than trend capital growth this year could include:

Surry Hills: An inner-city suburb experiencing gentrification and attracting young professionals and investors.

Marrickville: Known for its cultural diversity and vibrant lifestyle, with ongoing development projects driving demand.

Parramatta: Sydney’s second CBD undergoing significant infrastructure improvements and development, and offering investment opportunities.

Julian Khursigara, Partner, Search Party Property

We would expect demand for units to remain particularly strong in metro areas as affordability issues persist and investor interest picks up throughout the year.

Some recent industry surveys have indicated a growing trend of families opting to downsize in Sydney.

Along with seasoned Sydney investors returning to the market, this is probably another reason for the recent exuberance for units and townhouses.

By comparison, interstate investor attention is largely focused elsewhere, and first home buyers are also finding it increasingly difficult to break into the Sydney market.

Investors should be looking at these suburbs in the different parts of Sydney: Inner West - Balmain, Concord/Concord West and Earlwood; West - Quakers Hill and Schofields; South - Bangor and Engadine.