Liverpool suburbs dominate list of best Sydney suburbs to invest in

One southwest Sydney LGA is punching above its weight for rental returns, growth, and demand in a contracting housing market. See the suburbs.

Plummeting housing demand and an explosion in rent have created a window of opportunity for property investors to get cheaper Sydney properties with lower holding costs.

And one of most fertile hunting grounds is Sydney’s southwest, including the suburbs of Carnes Hill, Milperra, and West Hoxton in the Liverpool area.

The Make Your Move report, powered with PropTrack data, analysed price movements, rents, yields and tenant demand in every suburb in the country to determine the “best” locations for investing.

Suburbs deemed favourable for investors had higher rental returns, soaring demand from tenants and a history of strong growth in property values.

Carnes Hill ranked third on the list of Sydney’s top suburbs for investors, with a median buy price of $1.2 million, annual price growth of 32 per cent and median rental yield of 3.4 per cent.

This five bedroom, three bathroom home in Carnes Hill is currently for sale at $1.679m. Picture: realestate.com.au/Ray White Carnes Hill

Compared to the surrounding suburbs, there was 58 per cent more demand from renters for Carnes Hill homes, according to the report.

Shafeel Haq is a real estate agent with Ray White Carnes Hill and revealed why the suburb was a standout for investors and owner-occupiers.

“It was the first brand-new subdivision after West Hoxton. A lot of the homes have better build qualities, premium inclusions and fixtures,” Mr Haq said.

The combination of newer homes and higher quality builds feed into the rental prices in the area, Mr Haq said, while the smallest blocks of land in the area were still 400 sqm.

“You’re looking at $1.1 million to $1.2 million to purchase, which will get you at least $650 a week in rent.”

The suburb has a small turnover rate, according to Mr Haq, with only 40 properties sold in any given year.

Parkour performers at the Carnes Hill Community and Recreation Precinct. The precinct includes a skate park, the Michael Clarke recreation centre, and a library.

Right next door to Carnes Hill is West Hoxton, ranked 15th for Sydney suburbs, where the median sale price for houses is $100,000 less, and the properties slightly older on larger blocks of land.

“A lot of those homes require renovation, if not already renovated,” Mr Haq said. “Investors can be attracted to that as well. There’s a potential of making money and getting good returns, both on capital gains and rental returns.”

When it comes to units Moorebank is high demand for investors, ranked 9th with a median sale price of $690,000 and an eye-watering 146 per cent higher demand for rental properties than the surrounding suburbs.

Casula was ranked 13th, while Warwick Farm was 18th as an affordable suburb with a median unit price of $435,000.

Condell Park was ranked the 16th best Sydney suburb to invest in a units, with a median sale price of $790,000, and a modest annual price growth of 5 per cent.

PropTrack economist Angus Moore said the Central Coast and parts of Sydney’s west dominated the rankings because, compared to the city average, rents were much higher relative to home prices.

Property prices were also continuing to grow in some of these suburbs, despite the recent market downturn, due to an influx of “lifestyle” buyers wanting extra space, Mr Moore said.

The economist noted investors appeared to be capitalising on some of the improved conditions.

“Investment activity has been rising,” Mr Moore said. “Vacancies are now much less of a risk than they were in the early pandemic.

“At that time, rents were dropping in some areas, particularly the inner city, and some investors were selling properties and getting out of the market.”

Nathan Birch, the founder of buyer’s agency Binvested and the owner of more than 200 properties, said the “softer housing market” made it an ideal time to buy an investment property.

“Fear is everywhere because rates are rising. This is the time to get the best deals,” he said, adding it was a similar climate to 2008 when the global financial crisis was spooking buyers.

Prices had fallen across most suburbs during that period but the market quickly recovered in 2009 and the buyers who purchased during the slump got quick equity growth, Mr Birch said.

He noted recent rises in rents – Sydney house rents climbed 20 per cent over the past year – were well above recent interest rate hikes.

“Mortgage costs have gone up, but so have rents. You have to know where to look, but there are opportunities to get properties where the rent is more than the (repayments),” Mr Birch said.