Many of the once-industrial suburbs are now gentrified and are becoming phenomenally popular with buyers due to the easy proximity to the city and it being cheaper than the traditionally popular beachside Eastern Suburbs (the Eastern Suburbs are still a great area to own property if you have a little more to spend).
There is huge demand for apartments, but don’t be misled – spacious, period houses in leafy green streets can make superb homes and investments too.
The trouble is, if you are coming late to the party you probably need at least $1 million to buy a desirable 3 bedroom house in many of the Inner Western suburbs today.
But you can’t just buy anywhere or go for off-plan apartments along the congested Parramatta Road and expect capital growth to somehow magically follow.
In days of high inflation you could have bought virtually any property and experienced some “growth” as the value of debt was inflated away – but it won’t be that easy today. You need to buy the right type of property in the right locations.
For one thing, new properties tend to be very expensive and often offer significantly less value for money than the existing stock, which has been reflected in the recently depressed level of new home sales.
Both home buyers and property investors are targeting the same property types, those being existing properties that are reasonably affordable while interest rates remain at half-century lows.
You would normally be better served to seek out quality established properties in village-style suburbs with some open space, appealing village centres and suburbs which people actually want to live in.
One suburb I picked out years ago was Erskineville in the heart of the Inner West – it is only a few minutes from Central Station on the train and with a wonderful village centre with its cafes and pubs.
Just a short walk away is all the action at Newtown with its bohemian lifestyle and restaurants and wine bars.
Closer to the city I nominated Pyrmont which is easily walkable to the CBD.
Apartment prices have already leapt in Pyrmont as city-loving types seek more realistic alternatives to the new Barangaroo development where entry prices will be $2 million for 2 bedroom apartments according to the AFR.
Pyrmont has got everything from the casino to the fish markets, the weekend farmers markets, museums, Sydney Harbour and its wharves, leafy streets, shopping and entertainment.
With auction clearance rates at 85% in the Inner West last weekend as reported by APM, the market still has some way to run yet.
Some commentators will continue to recommend buying 50km-200km or more from the city centres.
OK, so in the short term you might get a higher rental yield.
But over the long term you will get stronger capital growth and far, far higher rental income investing in properties that people actually want to live in close to employment and close to entertainment and lifestyle.
But if you’ve been reading this blog since 2011, you already knew everything I have written today.
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