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October 23, 2018 | 11:05 AM
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13.07.2018State of the market: Focus on New South Wales

As the home of Australia's largest city, New South Wales is the most prosperous state in Australia.


As the home of Australia’s largest city, New South Wales is the most prosperous state in Australia. Unsurprisingly, it’s also one of the country’s property hotspots. Plenty of people from all around the world want to live here, and there is a host of exciting neighbourhoods in which to reside.

But the overall picture may be less rosy. Despite Sydney’s continued status as a global city and an investment hotspot, home price values are down. In fact, the statistics may be of concern if you’re an investor or owner-occupier here. This article will break down how Sydney and wider New South Wales (NSW) are performing property-wise, and also examine how NSW compares to the rest of Australia.

The role of Sydney

New South Wales is largely anchored around a single metropolitan area focused on the city of Sydney. Sydney is known for being truly sprawling; its suburbs and dormitory cities seem to extend forever. For that reason, it makes sense to look at this city first. The fortunes of New South Wales are intrinsically linked to Sydney, and the rate of urbanisation means that most citizens of the wider state have some economic or employment connection to the city.

In the last few years, there’s been a huge rate of property price growth in Sydney. In some areas it has even surpassed 70%. Even though that rate of growth hasn’t been maintained in the last year, it’s still on a high. However, for someone who is relying on their property’s value – and who bought on the assumption that rises would continue forever – even a small decline can spell disaster. However, the overall macroeconomic picture for Sydney means the city’s property market will likely get a boost sometime soon. Over 100,000 jobs appeared during 2017 alone, and that’s likely to feed back into house purchase prices over the long term.

The wider state

Even with Sydney’s urban sprawl, there is of course much more to New South Wales than its largest metropolis. Figures from the last year or so show that areas outside of Sydney are also experiencing change. In the major regional city of Wollongong, for example, there was a drop of almost 2% over three months last year, which is identical to the drop in Sydney during the same period. Over in the city of Newcastle, some calculations show that average prices plummeted by nearly 3% in a single quarter. So while there is some regional diversity here, it’s clear that Sydney’s influence exerts pressure across the wider state.

Across Australia

Despite the small declines in Sydney property prices in the last year or two, it’s still performing well against the rest of the country. Melbourne, for example, has only seen growth highs in the 50%-60% range, compared with Sydney’s rates of above 70%. However, Sydney falls down in other ways, especially when it comes to the proportional value of the changes.

The rate of the drop compared to highs in 2017 is perhaps the most interesting. In Sydney, house prices this year are now over -3% lower than they were in July of last year. In Melbourne, on the other hand, they’re just -0.4% at the 2017 high, and in the Queensland city of Brisbane, they’re only -0.1% at last year’s top levels. So while Sydney may have other property metrics going for it, things are less positive on the crucial issue of value change.

New South Wales continues to be a great place to live and work, and there’s no doubt that it will continue to be a cultural and economic epicentre for Australia in the decades to come. But as this article has shown, it’s always worth delving under the top line statistics to see what’s truly going on. And when it comes to property here in NSW, it may be worth exercising caution.


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