Unlikely suburb now best place to buy in Australia

A suburb that fell out of favour during Covid has bounced back to become the rising star among property markets this year, new research shows.

Inner Sydney enclave Surry Hills has topped a list of national suburbs expected to see the strongest growth in home values, with the same research warning investors to be “cautious” of Perth.

The WA capital has been the country’s biggest magnet for property investors over the past year, but the Price Predictor Index from research group Hotspotting revealed there were growing signs it was running out of puff.

Hotspotting examined trends across all the major markets in Australia and found that more than half the 50 areas with the sharpest rise in sales – a precursor to price growth – were in NSW.

Surry Hills was the suburb with the sharpest pick up in transactions, with experts revealing it followed a trend of rising unit demand. Buyers were also coming back to inner locations as companies asked workers to be in the office more.

Surry Hills Village, a new unit development. Apartments in the area have been rising in popularity.

Among the other 25 NSW markets included on the list of areas where sales volumes had risen for four quarters or more were inner Sydney suburbs Annandale, Darling Point, Woolloomooloo and Paddington.

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“History shows that there is a correlation between sales volumes and price movements: the number of sales changes first and then prices react – with a time lag,” said Hotspotting Director Terry Ryder.

“(It) means investors can buy ahead of price growth by finding locations where sales volumes are rising but prices have not yet moved.”

A fifth of the other suburbs with a notable bump in sales volumes over the past four quarters or more were in Victoria, with most of the remaining suburbs in SA and Queensland.

Suburbs in Western Australia failed to appear on the list.

Inner suburbs have bounced back since the pandemic.

This was despite the state accounting for most of the ascendant suburbs in last year’s index – a period just before Perth home values surged by 21 per cent annually, the fastest rise among the capitals.

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Mr Ryder said that investors should be careful when considering Perth, despite the city’s impressive price growth in recent months.

Sales volumes in the city were not only falling but it was taking longer for properties to sell and homes at the top end of the Perth market were beginning to fall, Mr Ryder said.

“We believe the top supercharged suburb in the nation is currently Surry Hills in (inner) Sydney,” said Hotspotting general manager Tim Graham.

The market has changed considerably since the Covid lockdowns. Picture: Sam Ruttyn

“Surry Hills is a market dominated by apartments, where demand has been rising in keeping with an emerging national phenomenon … Sales numbers have been trending sharply upwards.”

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Buyer’s agent Lloyd Edge, an accomplished investor with a multimillion dollar portfolio, said units in up-market suburbs like Surry Hills were getting more popular because of the cheaper prices relative to houses.

“Following the pandemic there was less demand for townhouses and units, but as housing in general has got more expensive the market for smaller properties is coming back,” he said.

Originally published as Unlikely suburb now best place to buy in Australia