Home Loans For Sydney - Our Tips For Buyers in Australia's Priciest City

The last few years have seen Sydney’s property market receive plenty of attention, with price fluctuations in particular rarely out of the news. We’ve put together a guide with some information you may want to think about if you’re looking for a home loan in Sydney.

Why buy a home in Sydney?

If you’re pondering a property play in Sydney, now could be a good time to potentially take advantage of prices which are lower than they have been in previous years. According to QBE’s Australian Housing Outlook 2018-2021 report, median house prices in the Harbour City fell by 7.6% in the year to June 2018. Then looking ahead, prices are only forecast to drop by an additional 1.2% between 2018 and 2021. So while the property values may continue to fall, the rate of the decrease is predicted to decelerate.

Additionally, while Sydney’s house prices have dropped in the last year or so, the city’s rental prices remain high. The most recent Rental Affordability Index shows that rental prices in many parts of metropolitan Sydney range from ‘unaffordable’ to ‘extremely unaffordable’ for most demographics considered in the report. So if you’re a Sydney renter and fed up with the high prices, getting on the property ladder could be tempting.

Of course, taking out a home loan can also come with significant expenses, such as fees and interest repayments, so consider weighing up your options carefully before committing to one.

Sydney is also set for a bit of a face-lift over the next few years – several transport upgrades are planned for the city, including the soon-to-open first stage of the Sydney Metro, along with the Parramatta Light Rail slated to open in 2023 and the plan to turn the M4 into NSW’s first ‘smart motorway’. Once up and running, these additions could make Sydney an easier city to navigate and get around.

How much does property cost in Sydney?

While Sydney’s house prices are on the decline according to the QBE report, after several prior years of rapid growth, the city still boasts Australia’s highest median house and unit prices. QBE puts Sydney’s huge spike in property values over the past few years down to a potent combination of limited supply, low interest rates, and ‘robust’ investor demand. However, QBE notes that all three factors have abated somewhat, which is why the city’s property prices have experienced a decrease in recent months.

Comparing Sydney to other capital cities, recent CoreLogic data gives an idea of how its median prices stack up.

Median house price Median unit price
Sydney $918,130 $711,501
Melbourne $751,246 $541,677
Canberra $672,332 $440,813
Brisbane $542,777 $383,904
Perth $471,730 $370,646
Darwin $500,970 $305,989
Adelaide $469,486 $329,300
Hobart $488,622 $381,819
National $666,226 $535,690

Source: CoreLogic – data accurate as of 31 December 2018.

It’s important to note, though, that prices can vary significantly from suburb to suburb. For example, data from realestate.com.au indicates that Willmot in Sydney’s north-west has a median house price of $485,000, whereas beachside North Bondi’s median house price is $2,560,000 at the time of writing.

Home Loans available in Sydney

 

If you’re currently considering a home loan, the comparison table below displays some of the variable rate home loans on our database with links to lenders’ websites that are available for first home buyers. This table is sorted by Star Rating (highest to lowest), followed by comparison rate (lowest-highest). Products shown are principal and interest home loans available for a loan amount of $350K in NSW with an LVR of 80% of the property value.

Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products.


*Comparison rate based on loan amount of $150,000 and a term of 25 years. Read the Comparison Rate Warning

Use Canstar’s home loan comparison selector to view a wider range of home loan products.

What to consider when choosing a home loan in Sydney

Maximum loan amounts

Some loan providers or individual home loan products place an upper limit on the amount you can borrow ($1 million is an upper limit for some lenders). And with Sydney’s median house price at nearly $900,000, there are likely to be plenty of houses in the greater Sydney area selling for upwards of $1 million. If you’ve decided on a home and loan size to suit your needs and budget, make sure you find a lender who can lend you the amount you want.

Branch access in Sydney

While not essential for everyone, you may want to consider lenders who have physical branches in Sydney if you intend to buy there. This can be convenient for some buyers during the home loan application process and throughout their loan term. However, it is worth remembering that some banks without physical branches in Sydney offer comprehensive online and phone services, while some may also have mobile lenders available who would potentially come to you.

Transfer (stamp) duty in Sydney

Sydney is subject to the transfer duty (formerly known as stamp duty) rules that apply in New South Wales, and it may be worth familiarising yourself with these, particularly when it comes to concessions that might be available to certain kinds of buyers and properties.

First Home Owner Grant in Sydney

Sydney buyers who are taking their first step onto the property ladder might be eligible for the New South Wales First Home Owner Grant. The eligibility for these grants can change from time to time. Visit the NSW Government’s website for current details.

Sydney’s auction rules

There may be some state-specific rules to consider before you start bidding on auction properties in Sydney. For example, New South Wales auction rules mean there’s no cooling-off period on properties purchased at auction, which means it could be a good idea to make sure you’ve done any necessary research on your property before the auction. Home loan pre-approval can also be helpful if you decide to buy at auction.

Flood maps

Certain areas along the Parramatta River are prone to flash flooding, including Homebush Bay, Newington, and Silverwater. Additionally, suburbs like Arncliffe and Marrickville may be at risk of flooding due to their proximity to the Cooks River. You may want to consider the flood risk of any suburb you’re looking at before committing to buying a home there.

A package home loan for higher loan amounts?

For those who are looking at some of Sydney’s more expensive suburbs, it could be worth considering a package home loan as an option. These products typically bundle a home loan with other products and can include additional features that a standard loan may not. While they often come with higher fees than a standalone home loan product, the additional features like offset accounts and potentially lower interest rates could possibly save borrowers with higher value loans over the life of the loan. Package home loans aren’t necessarily right for every buyer though, so it could be a good idea to weigh up your options before deciding to commit one way or another.

Top suburbs in Sydney and surrounds for capital growth

If you’re buying a property in Sydney or its surrounds, the potential to sell it in the future at a profit may be a consideration. Here are the area’s top 10 suburbs for average annual growth in median prices over the 25-year period to 2018. But remember, just because a suburb has performed strongly historically, it doesn’t mean it will continue to do so in the future.

  1. Currans Hill – 10.6%
  2. Clovelly – 10.5%
  3. Claremont Meadows – 10.5%
  4. Bella Vista – 10.4%
  5. Picton – 10.3%
  6. St Helens Park – 10.2%
  7. Mount Annan – 10.1%
  8. Wattle Grove – 10.1%
  9. Curl Curl – 10.0%
  10. Rodd Point – 10.0%

Compare Home Loans From 1.90%

Pros and cons of buying a home in Sydney

Depending on who you ask, Sydney’s either Australia’s most glamorous city or overpriced and congested. And while either may be true depending on your perspective, the question of whether living in Sydney is fab or drab requires a tad more nuance. Here are some of the pros and cons of buying a home in Sydney.

Pros:

  • Sydney is known for its gorgeous clear days, and while it can get hot in the height of summer, the city sees moderate weather for most of the year
  • Most parts of the city are a stone’s throw from a beach or three
  • While the city can be a frantic place to live, Sydney’s suburbs can be a great place to start a family – most suburbs have a community centre which offers plenty of useful facilities for new families
  • Sydney offers some of Australia’s best-known cultural attractions, including Mardi Gras, Taronga Zoo, and, of course, the Opera House  
  • Tip-top cafes and restaurants aplenty!

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Cons:

  • Sydney is notoriously expensive – it’s far and away the priciest place to buy a home in Australia
  • It’s also infamous for its congestion – if you drive to and from the centre of town, you could be in for a lot of sitting in traffic
  • When Sydney gets hot, it gets HOT – the city is considered an urban heat island, which means its high concentration of man-made surfaces artificially inflate the temperature in certain parts of town

Is Sydney a good location for property investors?

For years, Sydney was considered investor’s dream – easy access to finance and low interest rates made for ideal investing conditions. However, APRA’s clampdown on interest-only home loans was said to be particularly aimed at Sydney, and has subsequently had a significant impact on investment activity in the city – according to QBE the total value of loans to investors in NSW fell by 12.3% in 2017/18. Additionally, the fact that property prices are forecast to fall more until at least 2021 may discourage investor activity further, at least for the time being.

Sydney – key facts at a glance

Nicknames: The Harbour City, The Emerald City

Average summer max: 26C

Average winter max: 17C

Local delicacy: Oysters

Interesting fact: The city was originally meant to be named Albion

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