Sydney real estate: Shock value of each suburb exposed

These unexpected suburbs are home to Sydney’s most valuable housing markets, with almost 600 suburbs now worth over $1 billion, exclusive data reveals.

Sydney’s housing market is propping up a growing share of the economy, with more money now locked up in the homes across individual suburbs than in many of the country’s largest companies.

Valuations data provided exclusively to The Daily Telegraph showed there were just shy of 600 Sydney suburbs where the combined value of all the homes in the area was over $1 billion.

These billion dollar suburbs represented three quarters of the city and included 66 areas where the total value of all the homes in each suburb alone was over $10 billion.

The total worth of all the homes in each of the most valuable suburbs, including Mosman, Castle Hill, Randwick, Maroubra and others, was over $25 billion, according to the CoreLogic research.

Charles Wang and Samantha Chia have seen home values in their suburb, Lindfield, take off in recent years. They’re now selling their Grosvenor Rd home. Picture: Damian Shaw

This was well above the market cap of many of the country’s biggest companies such as Coles, Qantas, Origin Energy and Suncorp Group. Nationally the housing market is now worth $11 trillion.

Sydney’s most valuable suburb Mosman, where the combined value of every unit and house was estimated to be $44.7 billion, was worth more than the market cap of mining giant Rio Tinto.

The extreme amount of money locked up in various parts of the housing market follows years of runaway growth in home prices and mortgage debt.

PropTrack figures indicate Sydney prices have grown 85 per cent over the past 10 years.

Experts warned this has created a risk for the economy. It means natural downward fluctuations in prices that occur across the market every few years – including one expected to occur this year – could deal heavier blows than in previous decades.

CoreLogic director of research Tim Lawless said the housing market was easily the largest asset class in the country and had morphed into a key pillar of the economy.

“It’s where banks have by far the most exposure,” he said, noting that housing represented more than 60 per cent of the debt in bank balance sheets.

“If there was a significant fall in property values, the risk for the economy and the financial sector would be significant.”

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He added that the risk of a major correction in the housing market similar to the one seen in the US during 2008 remained low due to the country’s robust prudential standards.

But an interest-rate cut could muddy the waters as it raised the possibility of more families getting deeper into debt, Mr Lawless explained.

“Rate cuts would have an upside and a downside,” he said.

“It would be a positive thing for housing demand and it would boost confidence for homeowners, but if there is a very sharp buyer response driven by people taking on much more debt, financial regulators may need to intervene.

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Mosman is Australia’s most valuable suburb.

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“There are already considerable affordability challenges when you look at incomes and home prices and household debt levels are high.”

Ray White Economics chief economist Nerida Conisbee said the housing market had become so valuable that it was now influencing growth in other sectors.

“It has a major influence on consumer confidence and retail spending,” she said. “When prices rise, people feel better about their financial situation and will spend more.”

On the other hand, home price falls created a “negative wealth effect”, she said. “Homeowners feel poorer and reduce their spending.”

CoreLogic’s research compared the number of dwellings in each suburb with the median value of properties there to come up with an estimation of each suburb’s value.

The most valuable suburbs tended to amenities-rich areas that were popular and densifying. The home prices tended to be higher than the city average.

An artist’s impression of plans for Castle Towers in Castle Hill. Enduring popularity and recent development have made the suburb the country’s second most valuable suburb.

“It goes further than just the individual value of homes. It comes down to how expensive and how large the suburb is,” Mr Lawless said.

“There is a real concentration of value in our capitals. This points to where people want to live and where they believe they can get a high standard of living.”

Many of Sydney’s most valuable suburbs were on the north shore.

Charles Wang, a long-time resident of Lindfield, a suburb reported to be worth $11.5 billion, said he believed the region offered something for everyone.

“It’s really suburban with lots of trees, big houses, big blocks, but it is also close to some really urban areas like Chatswood and it has all the amenities you’d want,” Mr Wang said.

“The (prices) keep going up. They’ve changed so much since we bought in the area. It’s quite amazing.”

The most valuable suburbs tended to be highly sought after markets that are hard to get into. Picture: Sam Ruttyn

Ray White Upper North Shore agent Jessica Cao, who is helping Mr Wang’s family sell their house at 70 Grosvenor St, said buyer demand in the area still outweighed supply.

“If 10 groups come through an open home, we’d call that quiet,” she said. “There’s always way more buyers than sellers. It’s seen as an ideal place to live.”

Originally published as Sydney real estate: Shock value of each suburb exposed