Worst performing Sydney suburbs for home prices since 1995

A 30-year divide has emerged across Sydney as home prices multiplied by 15 times in some areas while stagnating in others.

Over the past three decades, inner suburbs and high-rise unit segments have seen the weakest performance in property value growth in Sydney.

New research exposed a stark divide from top performing suburbs with current prices that have mutlipled by up to 15 times while inner-city prices sit around three times what they were 30 years ago.

The data from PropTrack analysed up to 385 suburbs across Sydney correlating each to its property value increase in comparison to 1995.

Topping the list was Glenwood followed closely by Cecil Hills.

On the opposite end of the data was Sydney CBD with the lowest growth and current price around three times that of 30 years ago. Haymarket also revealed the same rise in value.

Sydney CBD was the lowest 30-year performer. 119/365 Kent Street, Sydney recently sold for $1.105m

Other lower-performing suburbs included Homebush West, Gosford, Darlinghurst, Parramatta and Rockdale with value increase around four times what they were three decades ago.

According to REA Group economist Angus Moore, suburbs across Sydney that saw the fastest growth in prices over the past three decades reasons often varied – from gentrification and redevelopment to growing appeal among cashed up buyers.

“Some already expensive areas became even more popular,” he said. “We know that one of the many drivers of home prices is wealth and people’s incomes. And there are a lot of people in Sydney earning significantly more than in the 1990s.”

Sydney prices were also driven by overseas migration, Mr Moore said Sydney loses more people than the rest of the country with young families frequently leaving for more affordable markets.

“Despite this headwind, the Sydney (population) is still growing because it attracts high overseas migration,” he said.

“Housing supply has not matched population growth.

“Sydney needs more housing and that’s put pressure on prices over many years.”

MORE: Prices up 15x: Sydney’s fastest growing suburbs since 90s

30/162-170 Parramatta Road, Homebush currently listed with a price guide $590,000 to $620,000. Homebush West current dwelling AVM is $619,000

Ray White Senior Data Analyst Atom Go Tian said in contrast to the top performers that were either eastern or western suburbs, the lowest performing areas fall near the city, with inner west and inner south west suburbs.

“The lowest performing suburbs seem to concentrate on these inner suburbs,” he said.

“The first thing I noticed is the bottom, Sydney, Haymarket and Pyrmont, they haven’t seen much housing development over the last 30 years, they are more unit or apartment centres. “These areas closer to the city are more dense and you don’t see too many houses in those areas.

“The second observation was that suburbs that performed the least were already very mature and established markets 30 years ago.

“Because they were already mature at that point, they didn’t see much development compared to Cecil Hills, Blacktown or suburbs along the metro line.”

MORE: One million Aussies in limbo amid housing standoff

6/265 Palmer Street, Darlinghurst listed guiding $1.05m just below the suburb median of $1.2m.

Buyer’s agent Michelle May also offered insight into the drivers for the lack of growth in the bottom performing areas.

“It would be really interesting to see the supply and demand curve there,” she said.

“Since 1995 there has been a fair amount of development of particularly apartment buildings in those suburbs, that would obviously have a direct impact on capital growth.

“The more options and choices buyers have available, that brings downward pressure onto that growth.”

Ms May said developers are going for the highest returns on their investment, which is typically one to two-bedroom apartments.

“If you were to break that down further – I bet three-bedroom, two-bathroom apartments would perform much better – because we are dealing with a generation of boomers who want to downsize but have nowhere to move to,” she said.

“People who want to get out of an apartment, can’t afford to move into a house because there is this huge gap price-wise, so three-bedroom apartments and townhouses are the hottest ticket in town.”

MORE: What ‘average’ now buys you in Sydney’s real estate market

5-65-67 Hills Street, North Gosford listed for $650-700,000. Gosford current dwelling AVM is $644,000

106-380 Harris Street, Pyrmont recently sold for $1.35m, the suburb current dwelling AVM is $1.35m

MORE: Shock auction: 2-bedroom Aussie house sells for just $50

Ms May said understanding how capital growth works on property is crucial for homebuyers and particularly first home buyers as purchasing property is ultimately wealth creation.

“Understanding supply and demand is part of that,” she said.

“I could not stress how important this is.

“If you pick the wrong property, you could be left straggling behind.

“Those people who bought in Homebush for example, now looking to get out and make their next property purchase, they cannot catch up to those other suburbs.

“People need to understand that buying your home is the biggest investment you are going to make in your life most-likely and to tread very carefully.”

WHERE HOME PRICES HAVE GROWN LEAST SINCE 1995

1. Haymarket

2. Sydney CBD

3. Pyrmont

4. Homebush West

5. Gosford

6. The Entrance

7. Parramatta

8. Darlinghurst

9. Rockdale

10. Ultimo

11. Westmead

12. Harris Park

13. Caringbah

14. Hornsby

15. Macquarie Park

16. Rushcutters Bay

17. Chippendale

18. North Sydney

19. Hurstville

20. Kogarah

Originally published as Worst performing Sydney suburbs for home prices since 1995