At the start of the COVID-19 pandemic there was a sense of panic about how the Sydney property market might fare. There sure were a lot of gloomy forecasts!
But here we are. A 4.95% rise in house prices and 0.98% rise in unit prices across the Sydney property market, according to Property Update.
In general, we're seeing a shift from the urban property market to the regional property market when it comes to growth suburbs in Sydney. Surprisingly, some City and Inner West suburbs have held strong despite this shift.
As part of our real estate news series, we've compiled a list of some of the best suburbs to invest in Sydney 2021, in no particular order.
This list is by no means exhaustive and we absolutely recognise that there might be other suburbs ripe for investment that we haven't included here.
As always, speak to a qualified financial advisor about your specific situation and circumstances before diving into any property purchase.
Narrabeen and Collaroy
⭐ The Sydney suburb to invest in if: you meet the high capital requirements to compete for these properties.
These Northern Beaches suburbs are exploding in popularity and can net you a handsome return on your investment if you can get your hands on a property there.
With the work from home trend highlighting a need for more work/life balance, young professionals seem to enjoy the idea of these warm, resort-like areas which also let you easily grab a train into the city if you need to.
According to James Kirkland in an interview with savings.com.au, Narrabeen specifically has a rental rate of 40%, and we can safely expect Collaroy to be around the same level.
These suburbs are the clear winners of the regional shift in the property market that we saw from COVID-19.
While the capital requirement to invest here is extremely high, they’ve got signs of growth left, right and centre and present a great investment opportunity in the Sydney property market.
- Median property price Narrabeen: $2,300,000 for houses, $952,500 for units.
- Median property price Collaroy: $2,580,000 for houses, $915,000 for units.
- Average rental yield Narrabeen: 2.0% for houses and 3.3% for units.
- Average rental yield Collaroy: 2.4% for houses and 3.4% for units.
- 5 year compound growth rate for Narrabeen: 5.0% for houses and 3.9% for units.
- 5 year compound growth rate for Collaroy: 6.3% for houses and 4.4% for units.
Bardwell Park performed excellently on the Sydney property market in 2020, with median house prices going from $1,160,000 at the start of 2020 to $1,350,000 at the end of the year.
James Kirkland, Director of Sales at Upside Realty in an interview with Savings.com.au throws the suburb a big mention despite the COVID-19 market, in part because of its proximity to WestConnex and spacious houses.
Bardwell Park sits in a high demand market and you'll likely see very healthy growth on your property if you were to invest in a house here.
- Median property price Bardwell Park: $1,400,000 for houses.
- Average rental yield Bardwell Park: 2.4% for houses.
- 5 year compound growth rate for Bardwell Park: 1.5% for houses.
⭐ The Sydney suburb to invest in if: you’re after high compound and year-on-year growth rates, especially so for units.
A Domain Property Report from September 2020 listed this suburb with a year on year growth of a whopping 27.2% for units! To add to that, compound growth rates are simply high across the board.
What's so surprising about this suburb is that units haven't performed as well as houses on the Sydney property market, with units showing a downwards trend quarter-on-quarter according to Domain.
It's hard to pinpoint why this is the case, but a good guess is that buyers and renters prefer spacious houses as opposed to smaller units after the pandemic.
Despite this, Fairlight is one of the few suburbs where a unit still looks like a good buy, so it still shows promise as a top growth suburb in Sydney.
- Median property price Fairlight: $2,525,000 for houses, $1,463,000 for units.
- Average rental yield Fairlight: 2.3% for houses and 2.5% for units.
- 5 year compound growth rate for Fairlight: 6.2% for houses and 7.3% for units.
Darren Venter in an interview with savings.com mentions Cronulla as a key growth suburb in Sydney for 2021. Here's what he had to say:
“Cronulla and surrounding suburbs offer one of Sydney more affordable beach lifestyles with all the major amenities”
Vacancy rates have halved, and property values keep rising.
Cronulla is a great suburb for residents who want a seaside neighbourhood, so a property here lets you access a key tenant demographic for a consistent income and strong capital growth for houses.
- Median property price Cronulla: $2,350,000 for houses, $810,000 for units.
- Average rental yield Cronulla: 1.9% for houses and 3.2% for units.
- 5 year compound growth rate for Cronulla: 5.5% for houses and 2.9% for units.
⭐ The Sydney suburb to invest in if: you have doubts about the regional property market's longevity.
Didn't expect to see an Inner West suburb on this list, did you? Neither did we! But, the facts are in the numbers and Petersham has the stats to back it up.
As one of the suburbs featured by Domain for defying gloomy COVID-19 forecasts, Petersham is rocking an astounding 27.4% growth rate for houses.
You'd primarily want to look at houses here, since again units have fallen out of popularity with buyers in the Sydney property market.
It is true that the regional property market boom is here to stay, but if you're thinking long-term, we can assume that living in close proximity to the CBD is bound to become popular again in the not-too-distant future.
For this reason, Petersham is a great investment opportunity if you're trying to avoid putting all your eggs in the regional Sydney property market 'basket'.
- Median property price Petersham: $1,675,000 for houses, $750,000 for units
- Average rental yield Petersham: 2.3% for houses and 3.1% for units
- 5 year compound growth rate for Petersham: 4.9% for houses and 2.3% for units
⭐ The Sydney suburb to invest in if: you’re looking for a low capital-requirement investment property with a strong rental yield and growth rate.
With a huge 32% growth rate according to Domain for houses, Bexley's popularity in the Sydney property market makes perfect sense.
Bexley is packed with spacious houses, has easy access to the city centre, inner west and eastern suburbs for the odd trip to the office, and is the most affordable suburb on our list.
For these reasons, a healthy 23.67% of the occupants in this suburb are renters.
If you're looking for a more affordable investment property that still boasts high growth rates, Bexley is a good option.
That being said, we would stay away from units in this area, as it's really the houses here which hold all the appeal.
- Median property price Bexley: $1,240,000 for houses, $660,000 for units
- Average rental yield Bexley: 2.5% for houses and 3.4% for units
- 5 year compound growth rate for Bexley: 2.4% for houses and -0.1% for units
Final thoughts on which suburbs to invest in Sydney for 2021
Overall, the outer suburbs are expected to perform well in 2021, especially the Upper North Shore, Northern Beaches, North West and Southern suburbs.
Be cautious about investing in inner city sections such as Lower North Shore and Inner West, though some suburbs are defying the odds.
The Sydney property market is forecasted to show a 7-11% growth rate in 2021. Even in a not-so-rosy condition, it may rise by 4% according to Property Update.
Despite the dip in rental prices in many suburbs, the price growth has held strong in many suburbs.
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The entire market was not considered in selecting the above products.