Commentary from David Hickey, Senior Executive, Metropolitan & Regional Sales

It is well documented that Sydney property prices have been on a steady decline for the past 12 months, but focusing on the overall downward trend doesn’t allow us to see the strong pockets of growth that remain in certain parts of our Sydney city fringe and eastern suburbs.

To understand the positive growth that’s still present in Sydney, it’s important to understand the reasons why we are now in a ‘challenging market.’

What we’ve seen in recent months is partly a response to decreased affordability in a booming residential market, tight lending environment, the pending federal election, difficultly for new entry capital from Asian investors reaching Australia and an oversupply of residential apartments with many projects complete. When combining all the external elements occurring in the economic environment, the property market has adjusted accordingly.

However, there is one thing that can overrule the effects of all of these factors: unwavering demand for quality real estate.

There is no shortage of demand in the City Fringe and Eastern Suburbs and both areas hold a very broad appeal for a variety of buyers, ranging from Offshore Investors, Local Investors, Owner Occupiers and Developers looking for ‘safe’ investments. No matter what’s happening in the market, there will be buyers seeking an opportunity in the most sought-after suburbs in the fringe and east of the Sydney.

For most, affordability isn’t a concern and buyers aren’t driven by normal fundamentals when acquiring commercial property in super prime locations and historically pay a premium to secure assets of this nature. We also find that many buyers are looking to the future, so a difficult short-term market is a mere blip on the radar as they plan to hold the property for a long period of time.

Convenience of public transport and amenities is a key driver for demand in these suburbs, as is the proximity to the city, beach and the harbour. They are also areas that haven’t seen too many new developments in recent years, so supply hasn’t outstripped demand and buyers are more than willing to compete to secure property in the City Fringe and East.

For houses in the Eastern Suburbs, the three suburbs in Sydney’s Top 10 for year-on-year growth are Surry Hills, 10.2%, Paddington, 8.9% and Vaucluse, 8.2%.

It’s clear why price growth remains strong in these suburbs, as they’re home to some of Sydney’s most beautiful and activated retail precincts and naturally attract interest from a multitude of buyers looking for opportunities to purchase super prime commercial property with safe fundamentals. 

Learn more about Savills Metropolitan and Regional Sales.