There are many things to consider when it comes towards purchasing a Sydney property. You might think about the number of bedrooms you need, access to local amenities and neighbourhood features. Price is obviously a huge factor too, with CoreLogic RP Data’s monthly indices recording Sydney’s average house value beyond the $1 million mark.
Prospecting the future
There are several ways to aim for a more affordable property. You might consider opting for a smaller home or living in a suburb further out from the city or coastal fringe. But does this mean that you’re passing up on future property appreciation by settling for a home that could be on the lower end of the market The short answer is no. You don’t necessarily have to spend big in order to earn big later down the road. A July 27 report by the Real Estate Institute of New South Wales (REINSW) shows that Sydney’s groundbreaking median house price is actually being pushed from the bottom end of the market more than it is being pulled by the top.
This means that “inner city suburbs prices would seem to be starting to level out” , as mentioned by REINSW President Malcolm Gunning. “The median house price will continue to rise, as those seeking to purchase a property are drawn to more affordable areas,” he explained.
Figures from an August 31 article by CoreLogic RP Data verifies this claim, showing that the proportion of homes valued less than $400,000 has declined dramatically. In the year to June 2010, 27.8 per cent of Sydney houses were worth less than $400,000. In the year to June 2015, the figure dropped to 7.8 per cent. Units in the city experienced even more rapid movements, with units worth less than $400,000, dropping from 39.8 per cent in June 2010 to 16.4 per cent in 2015.
This reveals that while homes with premium price tags may snatch the highest sales numbers, it could be properties in less sought after areas that rise in value the most rapidly.
Buying small earning big
There are several interesting benefits from buying a smaller property. Apart from the fact that your loan commitment will probably be lower, homes with fewer bedrooms and/or a smaller floor plan will generally be more affordable. However, if you decide to use your home as an investment property later down the road, you might find a surprising amount of demand waiting at your doorstep.
The Australian Bureau of Statistics (ABS) reported that the family size of Australians is projected to fall in the coming years. Figures project that the average household size will fall from 2.6 in 2001 to around 2.2 in 2026. Furthermore, the ABS forecasts a dramatic rise in lone person households, with this group predicted to grow between 57 and 105 per cent in the same period.
This indicates that there could be an increasing number of people who will seek out smaller homes like yours to rent by themselves or to share the space with another person or two. As you can see, buying a smaller home or a property that’s in a less popular suburb doesn’t spell doom for your future prospects. As value growth continues to chug along in Australia’s hottest property market, you could look forward to your home increasing in worth wherever it is.
No matter what your property goals or aspirations are, our lending professional at Customs Bank can help you find a loan to suit your needs.