Sydneysiders are beginning to make a mark on housing markets in other capitals as runaway growth in Harbour City prices encourages more to seek out properties in other locations.
Property prices in the Greater Sydney area have shot up an incredible 5.7 per cent since October and values last week hit a record high, surpassing the previous market peak in 2017, CoreLogic data showed.
This was despite Sydney prices already being an average of about $180,000 pricier than in Melbourne, $360,000 above Brisbane prices and more than $400,000 higher than in Adelaide and Perth.
The explosion in growth has made it harder for home seekers to get into the market and many are now ditching their plans for a Sydney home and looking for investment properties in other locations.
About 60 per cent of those polled in the 2020 Investor Sentiment survey by the Property Investment Professionals of Australia revealed they would consider “rentvesting”.
This meant living and renting in one area while owning or purchasing investment properties in a different location.
The survey also found more first-time buyers were rentvesting, with 44 per cent of first-time investors adopting the strategy last year – up from 34 per cent the previous year.
BFP Property Buyers principal Ben Plohl said there has been a particularly large spike in renvesters based on the lower north shore, where prices have ballooned.
“There is no question that the Sydney property market is in a rising market phase, but the speed of the uplift is already pricing out some potential buyers,” Mr Plohl said.
“Some would-be buyers are reconsidering their options and are choosing to invest their funds in more affordable locations, such as Brisbane and Adelaide.”
Major regional areas like Bendigo, Orange and Albury were also popular for those who wanted to invest while still renting in their Sydney location of choice, Mr Plohl said.
He added that prices in some exclusive Sydney suburbs such as Cammeray, Mosman and Willoughby were moving so quickly that some potential buyers couldn’t keep up.
“Some people rent in these locations already and have decided that it’s more affordable for them to continue doing so than stretch themselves too far financially to buy at the current time,” he said.
“Wisely, they are also deciding to make their available funds still work for them by buying elsewhere.”
There was a similar trend observed at the tail end of the last housing boom in Sydney in 2017 – the rapid price increases led to a surge in Sydneysiders seeking homes in other locations.
Among them was Hobart, which became the fastest growing housing market in 2018. Southeast Queensland was another popular market for Sydney investors.
A simple comparison of prices showed why other capitals and regional markets were so enticing for buyers based in areas like the north shore, Mr Plohl said.
“For example, $900,000 may not secure you much real estate on the north shore, but it could potentially buy you two houses in a more affordable capital city or major regional location, which are also experiencing strong market conditions,” he said.
Aidan Devine, realestate.com.au, 17 March 2021