Spring market buying tips in Sydney

If you suffer from hay fever, you’ll no doubt already have had a physical reminder that Spring is here….

But besides warmer weather, longer days, flowering trees and plants and lots of people sneezing, Spring in Australia is traditionally the time when the real estate market picks up after the Winter lull.

So, is Spring 2024 a good time to buy property in Sydney?

My answer is an emphatic “yes”.

I’ll explain why…

Seize the moment  

There are more properties on the market in Spring - that’s a given.

As an example, CoreLogic is reporting that auction activity is set to be up 10.2% on the previous week across the combined capitals over the weekend of August 31st/1st September as we move from Winter into Spring. 

If you are a home buyer or an investor, this immediately gives you more property choices.

Don’t waste your time looking for “bargains”.

They should come to you. 

High interest rates, high rents and the cost of living have either forced or scared many potential buyers out of the market, meaning that if you can afford a property now, there’s less competition for quality properties. 

Some buyers are also mistakenly sitting on their hands because they think prices will start to fall. 

Interest rates will start coming down either late this year or early in 2025 (some of the banks have already started cutting their fixed-term mortgage rates), and I think that once that happens, those buyers currently sitting on the sidelines will have a major dose of FOMO and jump into the market, driving up property prices further.

So, if you find a house you like or a great investment-grade property, make a silly offer and work up from there. 

You may find a nervous vendor might accept a low-ball offer because they are terrified there are suddenly lots of competing properties on the market when there were only a handful in winter.

Where to buy a home now in Sydney

If you are buying a home, the questions you usually ask yourself are straightforward: 

Does this property work for me and my family? 

Is it near to everything I need?

However, Sydney is the most expensive property market in Australia, so many first-home buyers will be more keen to get a foot on the property ladder and then hopefully later “trade-up” to another home that is nearer their work and other family members.

So, where can you buy a home in Sydney that is relatively affordable and has the potential to grow faster in value than other suburbs to give you a speedy increase in capital value?

One of the great things about Freedom Property Investors is that I co-founded the company with Lianna Pan, an actuary and data scientist who insisted that we establish a property advisory with a large research team, so the advice we give our members can always be data-driven.

So, I asked our research team to come up with a list of Sydney suburbs that met the following criteria:

1. “Relatively affordable”- We decided to define this by ruling out suburbs where the median price was over 80% of Sydney’s citywide median dwelling price of $1,174,867.
2. Excellent value growth- According to CoreLogic, dwelling prices in Sydney grew by 5.6% last year, so for the Top 5 list for both houses and units, the brief was to find suburbs that are growing at more than double the citywide median.
3. Commute times- Presuming some residents have to work in the Sydney CBD, we looked for suburbs where regular commute times should not exceed an hour and where big, non-CBD employment hubs were, preferably, less than 15 minutes away.
4. Strong local economy- We considered metrics like infrastructure spending, local employment opportunities and projected population growth to help determine whether price growth in the suburb would stay strong because of continuing demand.

This is what the Freedom research team came up with:

As you can see, the suburbs in the Top 5 list for both houses and units represent excellent value compared to the over-inflated prices you would pay for a lot of comparable suburbs, yet they are growing in value at an astounding pace (15.5% is the lowest year-on-year median growth rate) compared to Sydney’s citywide growth rate of 5.6%.

The Top 5 suburbs where you can buy an affordable house in Sydney this Spring are, on average, 43 km from the city, while units are, on average, just under 16 km.

Where to invest now in Sydney?

If you are an investor, the main questions you should be asking yourself are: 

Does this property stack up from an investment point of view? What’s the rental return, what’s the yield, what’s the capital growth potential?

Given the price of property in Sydney, capital growth, actual rents, and vacancy rates tend to take precedence for investors over the rental yields you can get in some other capitals, so this helped inform the brief to Freedom’s research team.

1. Once again, we used the “relatively affordable” definition to rule out suburbs where the median price was over 80% of Sydney’s citywide median dwelling price of $1,174,867.
2. Excellent value growth- Again, the brief was to find suburbs where year-on-year values are growing at more than double the citywide median.
3. Commute times- Presuming tenants may have to work in the Sydney CBD, we looked for suburbs where regular commute times would not exceed an hour and where big, non-CBD employment hubs were, preferably, less than 15 minutes away.
4. Strong local economy- We considered metrics like infrastructure spending, local employment opportunities, and projected population growth to help determine whether price growth and rental demand would stay strong in the suburb. 
5. We looked for suburbs where the current vacancy rate was less than 2%.
6. We looked for suburbs where rental yields were at least 3%.

This is what we came up with:

While the results above are extremely impressive, investors should really be asking themselves whether Sydney is an ideal market for them.

For the price of a “relatively affordable” investment in Sydney, it’s possible to buy two properties in Perth, Adelaide or even parts of south-east Queensland, where rental yields are higher and the cashflow to service those properties might be superior.

The take-out

While hopefully the figures we have come up with are useful, the bottom line is that you have to do your due diligence when it comes to real estate.

We recommend getting some good independent advice, particularly if you are looking at building a property investment portfolio.

Nevertheless, Spring is here, and it’s a great time to buy residential real estate. 

Don’t listen to what the media are saying about the possible direction of property prices or stories about a “cooling market”. 

The simple truth is that the property you like will probably never be cheaper than it is today.