Which are the best and worst performing Sydney unit markets?

Sydney apartment prices are rising, bolstered by a scarcity in the market, but it’s not all smooth sailing across the city’s 600 suburbs.

View of apartments along Sydney's hilly coastline.
Coastal Sydney suburbs continue to deliver capital growth for apartment owners. (Image source: Shutterstock.com)

An influx of international student and immigrant arrivals, housing affordability pressures, a stalled construction sector and more than 60,000 properties consigned to Sydney’s short-term rental market is leading to a major squeeze on the availability of apartments.

Sydney has consequently shown the strongest growth in unit rents of all capitals, increasing 5.8 per cent for the quarter and 19.1 per cent for the year to April, marking a new peak rate of growth in both quarterly and annual trends, according to the latest CoreLogic Rental Pulse report.

Relatively strong yields of 4.1 per cent are being generated, paying an average of between $663 to $771 per week, up from 3.1 per cent a year ago.

While Sydney pipped Canberra at the post three months ago as the most expensive city in which to rent.

The median value of Sydney units is $787,427, up from $776,780 in April, which was also up 1 per cent from March.

Over the past 30 years Sydney median unit values have increased 429 per cent from $183,230 in 1992.

Strongest performing unit markets

Theo Chambers, CEO, Shore Financial

Theo Chambers, CEO, Shore Financial

Not all suburbs are performing equally, according to lending specialist Theo Chambers, CEO, Shore Financial, who told Australian Property Investor Magazine that there are mixed results across the city.

“Although it’s common for people to speak of Sydney as one single market, many of the 600-plus suburbs perform very differently and you also see added variation within suburbs, based on property type, price point and street.

“Compared to three months earlier, we can see listing numbers have fallen, inventory levels have fallen and median asking prices have risen so buyers are being forced to compete harder, which is putting upward pressure on prices, and those dynamics don’t look like changing any time soon in the unit market,” Mr Chambers said.

Standout unit markets right now are predominantly in the affluent Upper North Shore suburb of Wahroonga, Hillsdale in the Eastern Suburbs, Epping to the northwest, the Greater Western Sydney suburb of North Rocks, South Hurstville in the St George area of South Sydney, and Minto to the southwest.

Suburbs that have strongly performing unit markets

Suburb Wahroonga Hillsdale Epping North Rocks South Hurstville Minto
Postcode 2076 2036 2121 2151 2221 2566
Average listings in May 22 13 164 8 16 2
Change in listings over 3 months to May -4% -13% -2% -11% -24% -75%
Median days on market in May 23 28 36 30 28 31
Median listing price in May $1,089,000 $669,500 $780,000 $606,000 $750,000 $540,000
Change in median listing price over 3 months to May +3.7% +1.0% +2.8% +1.0% +4.0% +2.8%
Inventory levels in May 3.07 months 1.60 months 5.61 months 2.10 months 3.58 months 1.28 months
Change in inventory levels over 3 months to May -0.03 months -0.04 months -0.22 months -0.53 months -0.55 months -1.06 months

Listings and inventory levels in the six suburbs are all down in the three months to May, helping drive their listing price in that period up by 4 per cent in South Hurstville, 3.7 per cent in Wahroonga, 2.8 per cent in both Epping and Minto, and 1 per cent in North Rocks and Hillsdale.

The median listing price in May for Wahroonga is $1,089,000, with higher median prices in Epping ($780,000), South Hurstville ($750,000), Hillsdale ($669,500), North Rocks ($606.000) and Minto ($540,000).

Domain’s Sydney April auction results show the most expensive unit of 11 sold on Neringah Avenue, Wahroonga, for $2.6 million, while in Hillsdale, of 11 units listed there for auction in the same period, seven were sold by private treaty and three prior to auction, while 40 apartments in Epping sold during the same period for a median price of $780,000.

Suburbs with weaker apartment markets

Mr Chambers said a rise in supply in some areas has been mirrored by a fall in demand, which has been noticed by both buyers and sellers.

“Buyers are being more circumspect, which has forced vendors to reduce their asking prices.”

“The Sydney unit markets that are currently underperforming are Macquarie Park, Belmore, Eastlakes, Woolloomooloo, Pennant Hills and Warriewood where we can see both listings and inventory levels have increased during the three months to May.

Suburbs that have poorly performing unit markets

Suburb Macquarie Park Belmore Eastlakes Woolloomooloo Pennant Hills Warriewood
Postcode 2113 2192 2018 2011 2120 2102
Average listings in May 295 36 13 23 12 9
Change in listings over 3 months to May +27% +13% +63% +44% +50% +13%
Median days on market in May 50 63 67 47 84 55
Median listing price in May $769,230 $539,000 $613,800 $980,980 $575,000 $1,400,000
Change in median listing price over 3 months to May -1.4% -0.1% -5.6% -1.9% -2.4% -1.0%
Inventory levels in May 8.93 months 4.85 months 3.11 months 3.60 months 4.00 months 1.76 months
Change in inventory levels over 3 months to May +3.26 months +1.83 months +1.63 months +1.23 months +1.09 months +0.94 months

Addressing supply and demand issues

Tim McKibbin, CEO of the Real Estate Institute of NSW, said demand for apartments is extremely strong and prices appear to have rebounded in recent months.

He said that with a housing supply crisis worsening by the month, there was significant scope across Sydney to increase density in areas well-serviced by transport.

Among developers, there’s an increasing recognition of the need to create high quality projects that leave a positive legacy at the community level and in a sustainability sense,” Mr McKibbin told API Magazine.

“Nothing should be off the table when it comes to tackling the supply crisis, so local councils must be held to account to adopt and deliver more appropriate housing targets in their local government areas, and productive relationships between governments and industry are needed.

Tax reform is essential to remove the barriers to supply and create the type of environment in which the delivery of new homes, including social and affordable housing, can be expedited,” Mr McKibbin said.

“However, it is widely recognised that the housing supply shortage is the most acute concern plaguing the market and planning process delays have created a scenario in which new projects can take longer to be approved than to actually build, which compounds this unsustainable situation.

“Meanwhile, tax across all tiers of government represents 40 per cent of the price of a new property.”

Vacancy rates and the impact on prices

REINSW Vacancy Rate Survey results for April 2023 show overall residential vacancies in Sydney remained at their lowest level since April 2011.

Mr McKibbin said the rental vacancy rate in Sydney had dropped to just 1.3 per cent – “a rate we’ve not experienced for more than a decade.”

Tim McKibbin, CEO, REINSW

Tim McKibbin, CEO, REINSW

“Over the last month, they’ve certainly not improved, remaining unchanged, signalling a tough time for renters,” he said.

The drop in the rate for Sydney overall is a result of vacancies decreasing in the Outer Ring of Sydney, which includes Blacktown, Mount Druitt, St. Mary’s and Penrith, which dropped to 1.3 per cent, a decrease of 0.4 per cent for the month.

The Inner Ring, which includes Alexandria, Centennial Park, Chippendale, and Newtown, rose slightly to 1.5 per cent while the Middle Ring, which includes Beecroft, the north-west of Epping, Carlingford, the Hills district, Kogarah and Bexley, increased to 1.2 per cent (up 0.4 per cent).

“Slight fluctuations are to be expected from month to month, but there’s no doubt that the rental crisis continues to maintain its grip on the market in NSW and month on month the story remains the same – rental availability reduces, but rents continue to increase and it’s an extremely tough environment for everyone involved in the market – tenants, landlords and property managers,” Mr McKibbin said.

Article Q&A

Is it a good time to buy a unit in Sydney?

A scarcity of apartment supply is breathing life into Sydney’s unit market, with the median value of Sydney units reaching $787,427, which is up from $776,780 in April, after a further rise of 1 per cent from March 2023.

Which Sydney unit markets are performing best?

The State of Sydney Report shows Wahroonga, Epping, South Hurstville, Hillsdale, North Rocks, and Minto unit markets are performing particularly well.

What is the average rental yield in Sydney?

Yields of 4.1 per cent are being generated in Sydney, paying an average between $663 to $771 per week, which is up from 3.1 per cent 12 months ago.

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