With Sydney’s market slowdown dominating the headlines and dinner time conversations, the focus has been on short-term price fluctuations, falling auction clearance rates and reduced buyer competition across the city.
But Sydney has a much better story to tell, with once-in-a-generation change on its way in the biggest sub-market within our city – Western Sydney, where almost half of Sydney’s population currently lives and where a million more residents will settle by the early 2030s.
In our newly-released McGrath Report, we discuss what is actually the most important thing happening in Sydney today.
The 24-hour, curfew-free Western Sydney Airport and its world class Aerotropolis business precinct will be one of Australia’s biggest infrastructure projects undertaken in decades.
Tens of thousands of new jobs and billions in new investment are about to permeate our most affordable property market, where prices have the most room to grow. It’s all about to start, with soil due to be turned at the 1,780 hectare Badgerys Creek site by Christmas 2018.
The airport is one of several infrastructure projects in Sydney that will re-rate local home values while the rest of the market is cooling.
The Northern Beaches Hospital will open in October 2018, the Sydney Metro Northwest rail will be running in the first half of 2019 and the CBD and South East Light Rail and the second stage of WestConnex will follow in 2020. There is much to be excited about!
As we all know, median prices have slipped in Sydney over the past year and demand is certainly down, particularly among investors and upgraders due to finance restrictions. It’s therefore no surprise to see stronger activity amongst downsizers, who often buy without a loan; and first home buyers supported by the bank of mum and dad.
Stamp duty cuts have had a significant impact, with first home buyer activity in New South Wales peaking at 15% of the market early in 2018, the highest it has been since late 2012.
Young buyers are favouring Sydney’s West and South West, in particular Liverpool, Kingswood, Camden, Campbelltown and Riverstone, government figures show.
A wave of downsizing across Australia is coming as more baby boomers hit retirement age. Sydney downsizers have replenished superannuation lost in the GFC and the property boom has substantially lifted the value of their homes, putting them in a good position to buy as the market cools.
The Federal Government wants them on the move to free up desperately needed family homes for younger generations. From July 1, 2018, downsizers are being incentivised with people aged 65 or over able to make a one-off $300,000 contribution from the sale proceeds of their home into super ($600,000 for couples).
Prestige property has had good price growth over the past few years, with some tapering off in 2018. Strong share market gains, business confidence and an improving economy have encouraged people to invest more of their wealth in the tax-free haven of a trophy home in iconic harbourside and beachside locations.
This time in the cycle requires Sydneysiders to do what most people unfortunately can’t – adopt a longer-term view. The market has cooled, with BIS Oxford Economics predicting Sydney’s median house price will remain lower than its peak through to 2021.
With interest rates so low and prices softening, now is the time to invest and/or pay down debt. The next upswing might be many years away but Sydney still has plenty of capacity for capital growth.
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