Inner Sydney Suburbs Ripe for Investment

Sydney's inner suburbs will present many attractive investment opportunities for buyers in coming years, as the development of residential real estate in Sydney's urban areas begins to ramp up.

Due to a new mandate for UrbanGrowth NSW issued by the state government, the Sydney region will see a higher rate of property development in its inner city areas, leading to more housing stock for buyers. This differs from what was seen in previous years, when the government chose to concentrate on urban development in the fringe suburbs of the city.

Now, the new mandate will concentrate on urban renewal projects in Sydney's inner suburbs to boost housing supply and cater for the growing demand for apartment living, according to the Urban Taskforce.

Development a focus for Sydney

There are currently five projects in UrbanGrowth NSW's portfolio underway across the Sydney region, two of which are located towards the inner suburbs. All of these projects combined will deliver 60,000 homes to cater for expected population growth, while also providing thousands of employment opportunities.

A number of these projects also include development for local transport infrastructure, which will improve the liveability of certain areas and make them more desirable to renters, buyers and investors alike.

One of the more significant projects is the Central to Eveleigh Urban Renewal program that will extend Sydney's CBD around Central through to Redfern. While improving railway transport services, the project will also provide more housing choices for buyers and a more vibrant city.

Strong rental growth

While development is underway, Sydney's inner city suburbs are already seeing strong rental conditions. Recent figures from the Real Estate Institute of New South Wales (REINSW) recorded a large drop in the number of vacant properties, bringing the vacancy rate to a two-year low in February this year.

According to REINSW President Malcolm Gunning, the fall in vacancies was largely felt in the inner regions, such as Leichhardt, Woollahra, Mosman, Marrickville and others. The vacancy rate for these areas fell by 0.3 per cent to 1.5 per cent - lower than what was recorded for outer and middle Sydney suburbs.

At the same time, Mr Gunning explained there is currently not enough rental stock on the market to meet the high demand from tenants, which will result in rental price rises. He also commented that the potential for increases in interest rates is likely to be a contributor to rental prices, too.