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Rents are stable and the fringe suburbs dominated by larger dwellings are performing much better in the vacancy race. With rents in some areas now beginning to increase slightly, this is due to a shift in values from inner suburbs to outer which has changed the supply and demand dynamic for homes that are close to popular schools, shops and reliable public transport. With further lockdowns pending, the same drivers that created a change in sentiment will possibly be accentuated as more of us re-assess our existing home and whether it still suits our lifestyle requirements.
First home buyers have been a force in the market, assisting to sell out 1 & 2 bedroom apartments that have previously languished in value since 2018. This has meant that the clearance rates are increasing and days on market shortening for this stock which is now beginning to trend upward in value. As a result, investors are now coming back into the market with a last reported AUD 8 Billion in home loan approvals according the Australian Bureau of Statistics, compared to a low of AUD 4.2 Billion in May 2020 after two years of similar volumes. What we’re expecting as a result of these lending approvals is that investors will continue to dominate the lower end of the market, creating further competition for first home buyers, driving up the values of 1 & 2 bedroom apartments which will strengthen rental yields as saving for deposits for first time buyers takes longer.
The current opportunities in the market lie in the areas with low vacancy rates with good local infrastructure where investors will be seeking security and the best returns, we expect these suburbs to outperform others in the following 6 – 12 months.
SUBURB SNAPSHOTS
CBD & Eastern Suburbs
Sydney (2000)
- Vacancy rate 6.8%
- Implied gross yield for houses 2.8%
- Implied gross yield for units 3.9%
Bondi Junction (2022)
- Vacancy rate 3.0%
- Implied gross yield for houses 2.8%
- Implied gross yield for units 2.8%
Zetland (2017)
•Vacancy rate 3.1%
•Implied gross yield for houses 3.0%
•Implied gross yield for units 3.6%
Inner West & West
Glebe (2037)
•Vacancy rate 3.9%
•Implied gross yield for houses 2.3%
•Implied gross yield for units 4.1%
Homebush (2140)
•Vacancy rate 6.3%
•Implied gross yield for houses 3.6%
•Implied gross yield for units 3.7%
Parramatta (2150)
•Vacancy rate 5.6%
•Implied gross yield for houses 3.2%
•Implied gross yield for units 3.5%
North West
Kellyville (2155)
•Vacancy rate 3.5%
•Implied gross yield for houses 3.1%
•Implied gross yield for units 3.7%
Carlingford (2118)
•Vacancy rate 4.4%
•Implied gross yield for houses 3.0%
•Implied gross yield for units 3.8%
North Shore
Turramurra (2074)
•Vacancy rate 3.3%
•Implied gross yield for houses 2.1%
•Implied gross yield for units 4.0%
Lindfield (2070)
•Vacancy rate 3.3%
•Implied gross yield for houses 2.3%
•Implied gross yield for units 4.4%
Crows Nest (2065)
•Vacancy rate 3.6%
•Implied gross yield for houses 2.4%
•Implied gross yield for units 3.7%
Northern Beaches
Manly (2095)
•Vacancy rate 2.6%
•Implied gross yield for houses 2.8%
•Implied gross yield for units 2.7%
Dee Why (2099)
•Vacancy rate 0.7%
•Implied gross yield for houses 2.4%
•Implied gross yield for units 4.2%