Could Sydney’s eastern suburbs be undervalued?
That may seem like a strange question given that we live in Australia’s most expensive property market, with seven of the top 10 most expensive suburbs in the country and every one of Australia’s 10 highest sales last financial year.
But the reality is that not every suburb in the eastern suburbs has the same median price, and even in the most expensive suburbs, not every property sells for the same amount.
With that in mind, we thought it was worth exploring whether Sydney’s eastern suburbs are cheaper than they should be, and also whether that means prices are likely to rise.
Not always an established market…
Sydney’s eastern suburbs might have the reputation for being one of Australia’s most established property markets. But the reality is that it hasn’t always been this way.
For instance, Clovelly may be one of the most expensive suburbs in Australia now. However, until recently, it was once relatively affordable – at least compared with much of the city.
In 1993, the median Clovelly house price was $273,000. To put that into perspective, CoreLogic data shows that the median Sydney house price in 1992 was $221,000.
However, today, its median house price is more than $4.5 million, while Sydney’s median house price is about $1.47 million.
That means, even though Sydney’s median house price has risen about 660% since the early 1990s, Clovelly has risen by more than 2,000%.
This shows just what can happen when a suburb is undervalued.
A lot has happened since the 1990s
While the 1990s might seem like yesterday for many of us, a lot has clearly happened since then. Sydney’s population has swelled by around 1.6 million, new parts of the city have opened up to housing, new transport has been built, new developments have been constructed and fewer parts of the city remain undiscovered or untouched.
Despite that, I think there is still potential for many parts of the eastern suburbs – and many property types – to outperform the Sydney-wide average. With that in mind, here are some of the suburbs and property types I think are undervalued today
1. Bronte
Like Clovelly, Bronte has been an absolute standout performer over the past few decades. It was always nice, but since the start of the Millennium, it has gone from being a moderately upmarket suburb to a premium one.
In case you’re in any doubt of that, Bronte is now the third most expensive suburb in all of the country with a median house price of $5.8 million.
But I think it still has room to grow.
In the time I’ve been working, I’ve noticed a trend for Gen X and Y to put a premium on the beach above even the harbour. Given more of this demographic are entering their prime earning years (otherwise known as middle age), we’re also likely to see more look to buy a prestige home by the beach. And no suburb does beachside prestige as well as Bronte.
At the same time, we’re likely to see older Gen X’ers begin to downsize, and many will choose to do so by the beach. This means we won’t only see pressure at the top of the market, but also in the smaller home and apartment markets too.
For that reason, I think Bronte’s already high prices are likely to go far higher still.
2. Bellevue Hill
Bronte may be expensive, but it has nothing on Bellevue Hill where the median house costs $9.17 million. But although it may be Australia’s most expensive suburb for houses, Bellevue Hill apartments remain comparatively good value, with a median price tag of $1.545 million (and that’s with 13.1% growth over the last 12 months).
There’s obviously a lot going for this suburb – and a reason it’s always been home to some of Sydney’s wealthiest residents. Not only does it have harbour views and beautiful parks, it’s also close to pretty much everything: the city, Double Bay, Bondi Junction and Bondi Beach.
That means, Bellevue Hill’s apartments will be sought after by the increasing number of downsizers, as well as families and couples who prefer convenient apartment living over a house further afield.
3. Potts Point
Speaking of which, no suburb does convenience quite like Potts Point. Just a 15 minute walk across the Domain to the CBD, it has one of the city’s most vibrant entertainment and dining scenes.
Over the last decade, Potts Point has cemented its place as the very best downsizer address, as well as an increasingly important destination for families and young professionals.
But the suburb median of just $880,000 looks like incredibly good value right now.
While this may include a large number of one-bedroom and studio apartments compared with many parts of the eastern suburbs, every newer development that comes online tends to offer larger apartments, too. This too should push the median value upwards and impact prices across the board.
Want more?
These are just three parts of Sydney’s east that I believe are undervalued right now. But the reality is there is very good value in a lot of suburbs, so long as you know where to look.
If you’re thinking of buying or selling in Sydney’s eastern suburbs, contact my team today.
