Don’t believe the market hype: inner-Sydney is selling

By David Servi

There’s been a lot of media pontification about the slowing housing market in Sydney. But if you are considering selling your property, you should beware of generalisations.

Analysis that might be true across the whole of the metropolitan area - a huge expanse that stretches from the Royal National Park in the south to the Hawkesbury river in the north, and west as far as Emu Heights - does not reflect the reality of the inner-city.

A more focused look at the inner city suburbs of Surry Hills, Darlinghurst, Redfern, Rosebery and Alexandria will see that Sydney’s resilient heart is still pumping. The combination of Sydney’s increasing congestion and the horrors of achingly long commutes has kept those terraces and inner city apartments – many within walking distance of the CBD – in hot demand.

Media pundits often quote the property data and analytics company CoreLogic in articles and commentary about the state of the market, and their statistical breakdown no doubt works across Australia, and across the nation’s capital cities.

Most recently, in July CoreLogic reported the real estate market across Sydney slowing (still growing, mind you, but growing at a slower rate), noting that “dwelling values rose by 0.8% over the June quarter, which was the lowest quarter-on-quarter growth rate since December 2015”. Lower growth rate, yes, but still growth.

But rather than lumping the entire Sydney metropolitan area into one basket, and assuming the health of the real estate market in Baulkham Hills is the same as the market in Bellevue Hill, or that Camperdown and Cabramatta properties are selling at the same rate, a more granular look at Sydney suburbs paints a truer picture.

I have sold and leased real estate in Sydney’s inner city for decades now, and I believe the market is still strong and will remain strong in the inner-suburbs. I know Surry Hills, Redfern, Darlinghurst and the inner-city surrounds well, and they stay strong.

My assessment, which comes from long experience in this particular market of the inner-city, is supported by formal analysis, and experience in capital cities around the world. Research by the Australian Housing and Urban Research Institute has found that suburbs within five to fifteen kilometres of the CBD consistently see a level of capital growth that outperforms suburbs.

Take Surry Hills, for instance. According to data crunched by the News Ltd real estate arm, annual growth in the inner city suburb is at 13.8 per cent, with a median price of $1.67 million, and rental demand is high.

Compared with the same period five years ago, the median sales price for houses in Surry Hills increased 90 per cent, which is equal to a compound annual growth rate of 13.8 per cent.

Shares on the Australian stock market, by comparison, increased in value by about 40 per cent over the last five years.

I know where I’d put my money. Inner city bricks and mortar. You can’t beat it.

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