Sydney unit prices at nine o’clock in their cycle and rising: Experts

While capital growth in Sydney units slowed down in the second half of 2011, it remains the only market segment to record positive growth during the whole year.

As a result commentators are fairly bullish and see room for more growth in 2012. Property valuers at WBP see more growth potential for affordably priced existing units (nine o’clock) than new unit stock (between 10 o’clock and 12 o’clock).

“New unit stock is fully valued with premium prices being achieved due to stock limitations and ‘non-market-related forces’,” says WBP.

“These include first-home buyer and investor new housing stimulus benefits under state government housing policy designed to encourage provision of new housing stock. History indicates markets can decline when stimulus-fuelled markets correct and properties are exposed to the market under normal market conditions without the hype.”

Time: Nine o'clock

However, WBP expects well-located affordable lifestyle units will continue to attract demand where the opportunity to buy a house is no longer feasible.

Metropole’s Michael Yardney says there is still strong demand from owner-occupiers for units but warns of a shortage of available “good” stock relative to demand, especially in the inner west and eastern suburbs.

“There are a lot of secondary properties for sale, and the market is not buying these,” he says.

“Strong rental demand, a shortage of rental properties, tightening vacancies and rising rents means investors will also vie for the same apartments as owner-occupiers, underpinning prices. The market for well-located apartments is likely to remain strong throughout the year, and this will be helped by falling interest rates.”

Century 21 chairman and owner Charles Tarbey also sees potential for price growth in Sydney houses and units.

“Sydney never reached the property price peak of the other states.  Stock continues to come onto the market but has steadied compared to this time last year,” says Tarbey.

Population: 4.57 million

Median unit price: $435,000 

Unit price growth in February 2012: 0.3% 

Annual unit price growth to December 2011: + 0.9% 

Annual unit price growth to July 2011: +2.6% 

Rental yield: 5% 

To find out where your capital city's house or unit market is on the property clock, download our free eBook.

Property Observer also tracks Sydney houses on the property clock.