These Sydney suburbs are witnessing a wave of property investors cashing out

Sydney's real estate market has been a popular choice for investors for decades.

However, recent trends have shown a shift in the landscape, with some property investors choosing to sell their assets in specific suburbs.

According to a recent article from The Sydney Morning Herald, a number of neighbourhoods are witnessing a sell-off as investors take advantage of improving property prices and the current market conditions.

CoreLogic figures show that investment properties made up 35.4 per cent of Sydney homes listed for sale last month, up from the 10-year average of 27 per cent.

Investors are jumping ship in a handful of apartment-heavy council regions.

The City of Sydney had the largest share of investment properties listed for sale in March, at 59.7 per cent of properties, up from a 10-year average of 38.6 per cent – the largest increase of any region.

It was followed by the North Sydney municipality where 57.1 per cent of homes were investment properties, up from an average of 40.4 per cent.

Then Cumberland and Parramatta council areas where investor listings climbed to 48.2 per cent and 48.1 per cent, respectively, up from about a third of listings long term.

The share of investor listings Sydney-wide was only slightly higher year-on-year, but well above the 10-year average.

It was followed by the North Sydney municipality where 57.1 per cent of homes were investment properties, up from an average of 40.4 per cent. Then Cumberland and Parramatta council areas where investor listings climbed to 48.2 per cent and 48.1 per cent, respectively, up from about a third of listings long term.

The share of investor listings Sydney-wide was only slightly higher year-on-year, but well above the 10-year average.

The reasons behind the sell-off

There are several factors driving property investors to sell their assets in certain Sydney neighbourhoods:

1. Rising interest rates are making holding costs higher despite skyrocketing Sydney rents. This may lead to some investors selling off their existing properties to reduce their debt exposure.
2. Market Uncertainty: With concerns about the global economy and the potential for future interest rate increases, some investors may be opting to reduce their exposure to property investments in Sydney. In my mind, this is short-term thinking as the is clear evidence that some sectors of the Sydney property market have turned the corner with prices rising for 3 months now
3. Time to get out:  some of the investors selling up are likely to have bought apartments in high-rise towers, often off the plan, and these would have performed poorly over the last decade.

Sydney suburbs where investors are selling

The SMH article highlights several suburbs where property investors are selling up.

Some of these areas include:

1. Parramatta: Known as Sydney's second CBD, Parramatta has seen significant growth and development over the past decade. The suburb is now home to a thriving business district, numerous residential towers, and modern infrastructure. With property prices in the area reaching new heights, many investors are taking the opportunity to cash in on their investments.
2. Bankstown: As a major commercial and retail hub in Sydney's southwest, Bankstown has also experienced substantial growth in property prices. Investors looking to sell their assets in the suburb may be attracted by the high demand for housing and the potential for strong capital gains.
3. Liverpool: Liverpool, another key centre in Sydney's southwest, has experienced significant property price growth in recent years. The suburb's strong rental market and the ongoing development of infrastructure and amenities make it an attractive option for investors looking to sell their properties.
4. Blacktown: Located in Sydney's west, Blacktown has seen a surge in property prices due to its strong population growth and ongoing development. Investors selling up in the area may be looking to capitalize on the suburb's strong market performance.

The rental crisis in Australia is not going away any time soon.

With more investors getting out of the market, and the majority selling to owner-occupiers, this means the rental crisis Sydney is experiencing is not going away any time soon

There is no quick fix.

It’s a complex issue that requires a multifaceted approach to address effectively and while the government keeps telling us it is concerned about the situation, I can’t see it doing anything to rectify the problem.

The law of supply and demand means that:

1. The rental crisis will remain for some time yet and rents will keep increasing.
2. The shortage of good housing will underpin property values for years to come.
3. Our property markets will remain fragmented - those with higher incomes will be able to afford to own property in our capital city middle ring suburbs where prices will keep increasing, while the less affluent will be pushed further and further out to the fringes of our cities if they can get into our property markets at all.
4. First-home buyers will have more difficulty getting into the market and will become more reliant on the Bank of Mum and Dad to help them get a foothold into property.
5. Unfortunately, the wealth gap between those who own property and those who don’t will only keep widening, and that is not good for our society.

Of course, this creates opportunities for new investors who have a long-term focus.

About Robert Chandra Robert Chandra is a Property Strategist at Metropole and has an intrinsic understanding of property markets backed by many years of real estate experience. This coupled with several degrees gives him a holistic perspective with which he can diagnose clients’ circumstances and goals and formulate strategies to bridge the gap.