John McGrath – Sydneysiders triple their income by owning a house
In just five months, the value of Australian residential property has gone up by $1.1 trillion to be worth a total $9.1 trillion, according to a CoreLogic report released this month.
Housing is easily our greatest store of value. Residential property is worth 28% more than the combined value of the Australian sharemarket, our superannuation and all commercial real estate.
Not only is it our greatest store of value, currently many Australians are earning more per year in capital gains than work income and nowhere more so than Sydney.
As discussed in our recently released McGrath Report, Sydney house prices have skyrocketed in 2021, up an impressive 25.8% over the first nine months of the year to a new record median of $1,311,641.
This is the fastest growth rate in Australia and equates to a value uplift of almost $300,000 since January 1 – equivalent to about 2.5x Australia’s average household income over an entire year.
COVID-19’s long term lifestyle impact and record low interest rates are motivating thousands of
Sydneysiders to upgrade their homes.
Two strong trends have emerged – a decentralisation from the expensive inner ring to the affordable city outskirts and a strengthening of the regional relocation trend underway since mid-2020.
These trends are enabling affordable upgrades to larger properties, accommodating one or two home offices, on larger blocks that provide space and privacy from the neighbours.
The inner city decentralisation is evident in Sydney’s top 50 suburbs for house price growth for the year to May 31, with 62% in Sydney’s middle or outer ring areas such as the northern beaches, western suburbs, outer southwest and south.
The top growth areas are Sylvania Waters (Sutherland Shire) up 64.8% to a median $2,720,000; Bardia (Campbelltown LGA) up 62.5% to $703,900; Catherine Field (Camden LGA) up 53.2% to $678,000; and Glenorie (Hills Shire) up 48.3% to $1,930,000.
Sydney VESPAs (Virus Escapees Seeking Provincial Australia) bringing their big city budgets to coastal and country areas have pushed regional NSW house prices up by 21.8% since January – the second fastest growth rate of all the regions and capital cities (just behind regional Tasmania with 22.2%).
This is on the back of the biggest population shift from Sydney into regional NSW in two decades, with the Central Coast proving particularly popular with favoured destinations including Copacabana, North Avoca and Chittaway Point.
Sales volumes in Sydney’s prestige market have surged as thousands of expats and wealthy locals use unspent travel dollars to upgrade. They are buying grand resort-style houses with amenities that provide a lifestyle at home, such as a cinema, boating facilities, a pool and tennis court.
Young first home buyers in NSW are favouring affordable suburbs in Sydney’s west and southwest such as Box Hill, Schofields, Austral, Oran Park, Campbelltown, Wentworthville and Liverpool.
Growth appears unstoppable in Sydney, however challenges may lie ahead with affordability,
negative population growth and an eventual increase in the number of homes for sale, as more
owners seek to leverage the fastest growth seen in the Australian marketplace since 2004.