As mortgage repayments rise,buyers are flocking to relatively affordable areas that neighbour more popular regions.
Home values in Sydney’s inner south-west,which takes in suburbs including Campsie,Earlwood,Wolli Creek out to Georges Hall,picked up 1.7 per cent in the three months ending February to a median of $1,133,270.
That was followed by the Central Coast (up 1.6 per cent),the outer south-west (1.2 per cent) and North Sydney and Hornsby (up 1.1 per cent).
CoreLogic head of residential research Eliza Owen said neighbouring regions to popular areas,like the inner west,were strong performers because they were relatively more affordable.
”We’re at a point now where more opportunistic markets,up-and-coming markets are driving growth and attracting the most demand,” Owen said. “High interest rates and affordability constraints are leading buyers to take a bet on up-and-coming suburbs rather than traditionally desirable markets.”
She also said as more time passes from COVID lockdowns,the more buyer demand reverts back to once popular areas like the inner west and surrounds.
But she warned Sydney was not guaranteed a sustainable upswing in values as home values were losing steam.
“We’re at the hardest part of the rate hiking cycle,where they’re at a peak,but economic conditions are slowing down as a result,” Owen said. “There are also people still transitioning out of their fixed terms that they secured during the pandemic,so more households will be tested and that could add a little to supply.”
Separately,Domain data shows these same pockets maintained healthy clearance rates at about 70 per cent or higher,a sign of a growing market. The inner south-west hit 73.9 per cent in February,the strongest in Sydney. But it was the even more affordable pockets that had made the biggest improvement in February compared to the same time last year.
The clearance rate in Sydney’s south-west jumped 24 percentage points in February,the outer west and Blue Mountains went up by 20.3 percentage points and the outer south-west increased by 13.5 percentage points. These increases pull most of these markets out of last year’s downturn territory.
Domain chief of economics and research Dr Nicola Powell said while higher clearance rates in auction-centric markets were expected,it was the improvement in more affordable markets that was a standout.
“What it showcases and supports the flight to affordability is the increase in clearance rates,” Powell said,noting that buyers were still mindful of mortgage repayments and taking on too much debt.
What was more important was improved auction activity at a time buyers had more homes to choose from,she said.
“There is clearly demand that is able to cope with higher auction volumes.
“You’ve got a pool of buyers saying ‘if rate cuts are going to come,should I get in now before prices rise further?’. What that does is bring forward demand.”
Earlwood sellers Monica and George Triantafyllou have listed their renovated house after more than a decade of living in the home.
“The area is doing really well and there is high demand so why not sell now,” said George. “We’ve been here for about 11 years. We did an alteration and addition,went up and back a little and renovated the existing house.”
Monica and George Triantafyllou outside their Earlwood home that is currently on the market with a guide of $2.3 million.Flavio Brancaleone
The home is within walking distance to shops,public transport and highly coveted schools,which were all drawcards for the Triantafyllous and now interested buyers in their home.
Their selling agent at Adrian William Norman Tran said there were above average inspections in areas like the inner south-west which takes in suburbs like Earlwood.
“Earlwood’s biggest driver for buyer activity are people coming from the inner west. Similarly,priced homes in the inner west either don’t have parking or are much smaller,” Tran said.
He said the Triantafyllous’ home,which was guided at $2.3 million,had attracted strong interest from young upsizing families.
“It’s been very popular with upsizing families. It’s got a generous internal layout… and proximity to the schools,” Train said.
He said while unit activity was driven by first home buyers,upgrading families were heating up competition for houses.
“Talks of rate cuts are driving higher activity because they want to buy now before it gets more competitive,” Tran said,noting the tight unit market was also pushing renters into the mix of buyers.
Meanwhile,sellers are motivated to sell in this market before more homes are added to the market later this year when rates are expected to be cut,he said.