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Some Revealing Stats About Sydney’s Real Estate Status

sydney property marketKevin Turner writes a piece for the website Property Update where he takes a cue from an earlier article written by John McGrath to shed light on the Manhattan effect prevailing in Sydney. It is well known that when demand rises, it takes property prices on a proportional upswing.

Median prices in Sydney’s inner, middle and outer rings

Sydney’s inner ring has median prices north of $1.5 million. The middle ring is stable over $1 million. The 20 km area around the CBD is now inaccessible to almost 9/10th of the investing population. And while the outer ring is relatively cheaper you still need to earn in excess of $100,000 to avail mortgage without stress in this area.

A table in Turner’s article reveals that you need something like $268,000 as your household income in the inner ring area and $197,000 in the middle ring area to avoid mortgage stress. To reiterate, the figure is $104,000 for the outer ring.

Median prices expressed as percentages of each other

Another useful real estate stat reveals that for the inner ring of Sydney, the median prices of apartment units is a shade less than 50% of what they are for the detached houses. In the middle ring, the same is a little above the 50% mark and for the outer ring, this median of apartment units can be read at 70% of the median for detached houses.

The great social question

The “social question” that arises is whether Sydney should be a place for all kinds of investors or should it be restricted only to the rich and the famous? Turner writes that you need about $625,000 on average to buy in the outer ring and it is quite some price to pay for the social privilege of living in Sydney (you must note that I am talking about an area where commuting can still be an issue).

Emerging gentrification trend

A gentrification trend that has been emerging is the new-found affinity for apartment units. In another departure, real estate of other capital cities, such as Melbourne and Brisbane, might become more attractive to those Gen Y investors who have medium-range incomes.

You can read the original article here.

While such a departure from Sydney cannot be envisioned at the moment, urbanisation trends develop subtly and over a period of time till they become a full-fledged reality. When prices become too high to be brought into the buying equation, the urge to look sideways will naturally enter the broader picture.

However, I am inclined to think that value growth will be most phenomenal in Melbourne in 2016 and many of its pockets will become unaffordable like Sydney. So, those with middle range incomes may have to settle in other territories comprising of, but not restricted to, Brisbane (high potential but has flattered to deceive till now) and the coastal areas in NSW.