Where you should have bought a house in Sydney 10 years ago

Sydney property prices have surged over the past decade providing a bonanza for those who got in early, with the rises split between elite areas and the booming outer suburbs.

In some areas, those home owners who bought a house 10 years ago have made annualised gains above 8 per cent, on Domain data. But even at the lowest level of growth, groups of Sydney suburbs rose by 4.1 per cent over the past decade, as at the end of February.

House prices jumped the most in the Wollondilly region, taking in suburbs such as Tahmoor and Picton, rising 8.1 per cent over the past 10 years. In eastern suburbs north, which includes blue-ribbon suburbs like Bellevue Hill, Bronte and Bondi Beach, prices rose by 7.8 per cent over the same period.

CoreLogic head of Australian research Eliza Owen said the northern pocket of Sydney’s eastern suburbs was “a bit of a bubble unto itself”.

Owen said despite very little development occurring in the area, the elite pocket had been able to maintain its prestige and annual growth over the past decade.

Selling agent Hannan Bouskila from Raine & Horne Double Bay said the demographic of the eastern suburbs has changed substantially. The median house value of the area now sits at $4,816,445.

“Twenty years ago, when I first started selling, there was a lot of what you would call cheaper rentals… with the much higher rents and the purchase prices, and obviously a lot more owner occupiers taking up in living in those areas, it’s really pushed that out,” he said.

Bouskila added the “changeover cost” between apartments to a house was much higher than previously.

“Let’s say you owned a two or three-bedroom apartment, and you wanted to change from that to a semi or a house,” he said.

Prices in blue-ribbon suburbs like Bellevue Hill have surged over the past decade.

“Hypothetically, let’s say the change over from one to the other would have been, let’s say, $1,000,000 ten years ago. It might, very well might be $2,000,000 now.”

”If you work backwards the amount of money you need to make to be paying a mortgage anywhere near that, you need to be on a very high salary .”

The Blue Mountains, with a median house price of $929,084, ranks as an affordable region and has recorded annual growth of 7.2 per cent over 10 years.

Selling agent Brenden Purcell from Purcell Property said, “the average sale price in the mountains is much lower than Sydney, of course, so it is much more affordable. It does make it easier to get into the market.”

Purcell puts the region’s performance down to several factors; highway upgrades, scarcity, health and lifestyle.

“I’ve noticed that, particularly over the last five years, people are starting to become much more health conscious,” he said, adding that the slower pace of life was a drawcard for buyers.

As the Blue Mountains is in a world heritage area, there’s a limit to new land subdivisions, Purcell said. He added that the demographic now included more young families drawn to the old world charm of the area.

“There’s still beautiful cottages, there’s wide set streets, there’s nice established trees, and these things are very much intangible points of value that can’t really be replaced, which do become an attraction to a lot of buyers, particularly from Sydney.”

The Blue Mountains median house price of $929,084 ranks it as an affordable region.

“In terms of affordability, there’s affordable properties, but there’s also some very nice properties up here that demand quite large prices.

“We have got the Baby Boomers starting to retire now, and therefore they are looking to escape Sydney and move to more locations like the mountains that offer good amenity and close proximity to Sydney,” he said.

“I would be very confident in saying that the growth of the mountains is going to outstrip Sydney over the next five to 10 years,” Purcell said.

Still, CoreLogic’s Owen said once an area has been gentrified it could not expect to continue to grow exponentially.

“For areas that have undergone this gentrification in a particular period … Gosford on the Central Coast, or the Blue Mountains, or Wollondilly, there’s probably a ceiling to the level of growth that can be achieved in these areas,” she said.

As for areas that incurred gains of less than five per cent; Hurstville, Cronulla, Miranda, Caringbah, Kogarah and Rockdale, Owen put this down to housing development.

“These are the areas that have seen, you know, still a decent amount of growth over the past 10 years, but much lower than what we see in those areas that are tightly held and resist new development,” she said.