NSW Investor Boom

Hotspotting

The latest lending data from the Australian Bureau of Statistics finds that loans to investors in New South Wales in April represented a 44% increase on the same time last year.

That’s a major jump in buyer demand, but it does not surprise the team at Hotspotting, particularly after the analysis we have done on market trends for the Winter edition of The Price Predictor.

Our research shows there is heightened buyer activity in selected locations, both in Sydney and in Regional NSW.

The Price Predictor Index finds that some of the nation’s regional areas are the leading markets in the nation, including the Wollongong/Shoalhaven region in NSW.

In the Winter edition of the PPI, we have nominated the Shoalhaven LGA as the strongest market among the nation’s municipalities, while the City of Wollongong also makes our National Top 10.

The Price Predictor Index for several years has charted the trend we call The Exodus to Affordable Lifestyle and our latest analysis suggests the demographic drift from the biggest capital cities is still pumping strongly.

In some cases, the NSW regional markets of note are what we call “second-wind markets” -locations across Australia which were at the peak of their up-cycles in 2021 and then subsided in 2022 and 2023 – but are now showing signs of embarking on the next up-cycle, with improved activity late in 2023 and early in 2024.

A prime example is Byron Bay which previously had a boom which, in reality, overshot true value – with property values doubling in two years. The median house price peaked at $3.5 million in mid-2022, but dropped markedly since to as low as $2.4 million. Now we see evidence in the sales data of a pickup in activity and also the first signs of prices recovering.

The strong Albury-Wodonga regional city at the NSW-Victoria border was a boom market until mid-2022 – and now, after a flat period, is showing early signs of revival. The suburb of Albury is one of our National Top 50 Supercharged Suburbs in the Winter edition of The Price Predictor Index.

Other standout locations include Newcastle and nearby areas such as Lake Macquarie and Port Stephens. Mid-coast centres like Forster and Taree are also travelling well.

In Sydney, the top end is undoubtedly leading the Sydney market while the cheaper areas are struggling to maintain their previously high sales levels.

Locations where houses sell for multiple millions of dollars are the strongest clusters for buyer activity, in a Greater Sydney market where sales levels have moderated a little but continue to be solid.

Our analysis reveals three stand-out clusters of suburbs where sales activity is most vibrant, all of them at the upper end of the market – the municipalities of Woollahra, Waverley and Bayside.

Within these LGAs, suburbs classified as rising markets include Bondi, Darling Point and Paddington.

Inner-city areas which have been boosted by strong demand for apartments in the past year or so – Sydney City and the Inner West LGA - continue to generate good buyer demand.

Rising suburbs in the City of Sydney include Surry Hills and Woolloomooloo, while Chippendale stands out for its consistency of performance.

At the opposite end of the market spectrum, outer ring areas including the municipalities of Blacktown, Hills Shire and Penrith have lost momentum and have significant numbers of suburbs classified as declining markets.

This is part of a notable trend nationwide which finds that new development areas are among the struggling markets with sales activity falling.

The problems within the housing construction sector are well-documented, with building companies going broke amid rapidly rising costs and shortages of tradespeople and materials.

We note that sales levels in the City of Blacktown, which has been a star performer in Sydney in recent years, have faded notably. It’s noteworthy that many of the declining suburbs have median house prices well above $1 million and no longer provide relative affordability, including Rouse Hill, The Ponds and Schofields.

In The Hills Shire, an even more expensive market in the far north-west, sales activity generally has dropped notably and half its suburbs are now rated as declining markets. They include a number of suburbs which all have median house prices above $1.7 million and in some cases above $2 million.

Listings of homes for sale have been trending upwards in the Hills District recently, so low sales volumes cannot be attributed to a shortage of properties.

But beyond that hiccup in the outer Sydney market, New South Wales broadly presents as a place that is attracting strong buyer demand, both in Sydney and in regional markets, with an uplift in investor activity a key factor.