Sydney suburbs where priced-out home buyers found the next-best thing

While the Sydney unit market is facing a slowdown in price growth, there are a number of suburbs busily bucking that trend.

Some are in more prestigious areas where buyers have given up hope of being able to splash out enough cash for a house and are opting for apartments instead.

Unit values are rising in North Bondi.Credit: Domain

Most of them are in the more affordable parts of Sydney, in the west and south, where renters are seeking out bargains in order to slip a toehold into the property market, pushing prices up.

As a result, unit prices in some suburbs have shot up by as much as 6.1 per cent in the last quarter, with others in the top 10 also rising strongly.

“It’s proved a bit of a mixed bag across Sydney,” said Kaytlin Ezzy, economist with CoreLogic, who prepared the latest figures. “Some of the suburbs that have seen the most significant unit price rises are at the more affordable end, which, in general, has seen the strongest growth.

“Over the past three months the lowest-priced 25 per cent areas have risen by a total of 1 per cent, the mid-market by 0.5 per cent, and the upper quartile has been much flatter and might go into negative territory over the next months.”

The high interest-rate environment, coupled with limits on borrowing capacity and cost-of-living expenses, has motivated buyers to look for apartments in the more affordable parts of Sydney, Ezzy believes.

When they have more resources at hand they’re buying in more expensive areas, but choosing units over houses since house prices have risen by 37 per cent since March 2020, and units by only 10.9 per cent over the same period, on CoreLogic data.

Among those pricier suburbs, unit values at Warrawee on the upper north shore have risen the most, by 6.1 per cent on the last quarter to a new median of $1,068,840.

“It’s a very good suburb with great school catchment areas, so if people are on a limited budget then they’ll choose units over houses in order to live there,” said Young Liao of S & S Real Estate.

“In addition, we have a lot of Asian buyers there who are used to apartment living and aren’t so keen to buy houses. Maybe their first choice is Chatswood but they haven’t been able to get in, and so there’s a lot of demand for Warrawee, which is making prices grow.”

Elsewhere there were big jumps in unit prices in Monterey in southern Sydney, with a rise of 5.2 per cent on the quarter, Russell Lea in the inner west with 4.6 per cent, North Richmond in the north-west with 4.4 per cent, and North Strathfield in the inner west with 4.3 per cent.

Woolooware, also in the south, and Greenwich, on the lower north shore, both rose 4.1 per cent, sought-after North Bondi in the east added 4 per cent, and Richmond in the north-west gained 3.9 per cent.

In North Bondi, with the highest median of the 10 at $1,639,441, Hamish McMaster of LJ Hooker Bondi Beach said the unit market is running hot. “It’s traditionally a very safe buying area for the longer term for both investors and owner-occupiers,” he said.

“It’s also traditionally a very tightly held pocket, so it’s very rare that supply would ever outweigh demand. And while houses are now pushing $4 million, you can still get a one-bedroom unit for anywhere from $800,000 to $900,000, or two beds towards the $2 million.”

Meanwhile, the cheapest suburb in the top 10 unit price growth chart is Regents Park in Sydney’s west, where unit prices have risen a healthy 4.6 per cent to a comparatively lowly median of $496,822. Over the past year, units have had a 9 per cent price hike.

“We’ve been seeing a lot of demand for units there,” said Anthony Daidone of Phillip Daidone Realty. “It’s a suburb that’s still affordable for a lot of people, so many buyers are trying to stop renting and want to buy a unit instead.

“For the median, you can get a two-bedroom unit with a lock-up garage, in a red-brick, older-style block. With the rising cost of living and interest rate charges, it’s becoming more and more popular.”