10 best suburbs in Sydney to invest in 2021-22

TERRY RYDER
Find out which suburbs in Sydney made the top 10 list in Canstar’s Rising Stars Australian Property Market Report powered by Hotspotting.

The Sydney market embodies all the apparent contradictions of residential real estate in the pandemic era. It’s losing population to internal migration and there’s no longer any overseas migration to compensate. Its economy has suffered multiple lockdowns and other restrictions.

Many Sydney residents have sold and headed elsewhere in the nation. And yet the city’s market has delivered a significant uplift in sales activity and prices. It defies everything that economists tell us should happen in the housing market.

Sydney, in fact, is a case study in the underlying truth of Australian real estate in 2021 – that it’s rising because of the pandemic, not despite the pandemic. COVID-19, and the reactions to it from governments and from individuals, has unleashed forces that have nourished Australians’ desire to buy real estate.

These forces range from government stimulus measures, enforced savings in lockdown, the inability to travel overseas, the return of expat Australians and low listings by reluctant vendors at a time of high demand, to the status of real estate as a safe haven for savings in times of uncertainty.

 

An aerial view of Hyde Park and Darlinghurst, Sydney. Image source: FiledIMAGE/Shutterstock.com

The 10 best suburbs in Sydney to invest in

  • Bass Hill
  • Cherrybrook
  • Darlinghurst
  • Jamisontown
  • Leumeah
  • Minto
  • Miranda
  • Normanhurst
  • Pagewood
  • Yagoona


At a time when the median house price for Sydney overall is over $1.3 million, middle ring precincts with good infrastructure and houses below $1 million are increasingly popular. Local government areas such as Sutherland and Canterbury-Bankstown are being targeted and there has been a significant increase in buyer demand.

It should be noted that, in making our selections, we have disregarded suburbs that have recorded median house price growth above 20% in the past 12 months. We have focused on places that meet the overall criteria and have shown strong price growth in the latest quarter relative to their annual growth, as this indicates the rate of price growth is accelerating.

While many of the inner-city markets have taken a COVID-19 battering, Darlinghurst has defied the negatives, maintaining relatively low vacancies (2.8%, compared to 6.3% in the Sydney CBD and 6.1% in Ultimo) and recording a significant uplift in sales, with volumes doubling over the past 12 months. Prices are reacting to the increased demand, with particular uplift in the latest quarter. This applies to both houses and apartments in this precinct.

In the eastern suburbs, Pagewood in the Bayside LGA is a standout, with strong parameters including below-average vacancies, strongly rising rentals, increasing buyer demand and a positive reaction recently from prices. The median house price is now above $2 million.

In the north, Normanhurst in the Hornsby LGA has delivered solid metrics: vacancies well below Sydney averages, strongly rising rents, steady increases in sales activity and healthy increases in prices, notably in the latest quarter (up 11% in three months to reach a median house price of $1,575,000).

Nearby Cherrybrook is another thriving market, underpinned by rising buyer demand, low vacancies and strong rentals. The rate of price growth is increasing. This suburb is part of a precinct that benefits from major investment in transport links and large-scale property developments, which generate economic activity and local jobs.

Outer ring areas of the Sydney metropolitan area are doing well, helped by major new infrastructure developments like the Western Sydney Airport and their relative affordability. Jamisontown in the City of Penrith attracts steady demand from both buyers and renters. Vacancies are low, market activity is strong and prices have surged, particularly in the latest quarter, with the median house price up 8% to $740,000.

Minto in the Campbelltown LGA has vacancies below 1%, rising buyer demand and a recent acceleration in price growth, with the median house price approaching $700,000. Nearby Leumeah (median price $650,000) has similar metrics pointing to strong price growth in the near future. Both suburbs have commuter train stations in a precinct with good services and amenities.

Middle ring areas that provide better value than the upmarket precincts include Sutherland Shire where there has been rising demand from lifestyle buyers seeking relative affordability, with houses typically in the range from $1 million to $1.5 million. The suburb of Miranda is attracting growing demand from both tenants and buyers – and the rate of growth in the median house price (now $1,360,000) is rising lately. Proximity to Gymea Bay and Yowie Bay, schools, major retail and commuter train services are part of the appeal here.

The Canterbury-Bankstown LGA is becoming more popular because it offers a good location with good infrastructure at prices below $1 million. Growth markets include Bass Hill, where vacancies below 1% and rising sales activity are helping to push up the median house price (now $890,000); and Yagoona, which has similar metrics, with the median house price rising 6% in the latest quarter to reach $900,000. Yagoona is on the fringe of the Bankstown commercial/retail centre and has a commuter train station.

The 10 best suburbs in Sydney to invest in

← Mobile/tablet users, scroll sideways to view full table →

Suburb Median house price 1-yr growth 10-yr average
annual
growth (%pa)
Vacancy
rate
Median
rental yield
Bass Hill $890,000 11.2% 6.6% 0.6% 3.0%
Cherrybrook $1,615,000 9.7% 8.3% 1.2% 2.4%
Darlinghurst $2,010,000 11.8% 8.8% 2.8% 2.0%
Jamisontown $740,000 13.4% 7.0% 1.2% 2.9%
Leumeah $650,000 9.4% 7.8% 0.7% 3.1%
Minto $690,000 9.5% 8.5% 0.8% 3.2%
Miranda $1,360,000 10.7% 7.4% 1.9% 2.8%
Normanhurst $1,575,000 17.2% 8.6% 1.9% 2.2%
Pagewood $2,035,000 11.5% 8.2% 1.9% 2.2%
Yagoona $900,000 11.5% 7.1% 1.0% 2.8%

Sources: Median price, growth and rental yield: CoreLogic data sourced from yourinvestmentpropertymag.com.au dated 1 August 2021. Vacancy rates: SQM Research as at September 2021.

Cover image source: GagliardiPhotography/Shutterstock.com


Terry is the founder and Managing Director of hotspotting.com.au, which he created in 2006 to help investors find the best places to buy. Terry has been a specialist researcher and writer on Australian residential property in a career spanning four decades. During that time he has published four books.

 

 


Thanks for visiting Canstar, Australia’s biggest financial comparison site*