Western suburbs best bets for Sydney investors in 2012: HTW

The best property bets for Sydney property in 2012 would be most areas in the western suburbs, according to valuer Herron Todd White.

“This segment of the market should see steady capital growth and strong rental returns throughout the year,” the group has forecast.

“Best bets for 2012 would be most areas in the west at the lower to middle end of the market.

“We are seeing signs that small investors are continuing to return to the market in good numbers, looking to take advantage of strong rental returns in areas such as Mount Druitt.”

The valuer suggests new property investors had been “possibly spooked by the stock market fluctuations of late 2011”.

HTW says it is difficult to predict how things will progress as 2011 threw up plenty of challenges with the continuing resources boom counterbalancing poor economic global performance and some lack of business confidence.

“The challenge is trying to see through the macro and micro indicators and come up with a balanced view on how residential will perform this year.

“It seems that good local knowledge of each market’s different sectors is vital.

“The big picture view and blanket statements can prove all too general in a market like this current one.”

It noted The Hills acreage/prestige market appeared as though it would remain quite stagnant with negative growth a possibility through 2012, “so probably one to avoid”.

A major problem pinpointed for the Sydney market was how prospective purchasers react to the changes to the stamp duty exemption.

“This may price out first home buyers who fuel the market in the south west suburbs.”

It noted the upper range of the market had already stalled with very few high end properties selling in the last six months.

“The unemployment rate will also cause some effect,” the report notes.

Local agents in Western Sydney believe immigration is another possible reason for increase in property values, with areas surrounding Auburn and Parramatta remaining popular.

“With cheaper prices and a central location, foreign purchasers have kept the market strong and is predicted to continually grow in 2012,” HTW notes.

In Liverpool and Fairfield areas, the upper range had slowed, however, the properties under the median prices were selling quite well and are also expected to continue in 2012.

The Bankstown and Liverpool areas are envisaged to have “good buys” in 2012, with unit prices approximately $200,000 to $250,000, providing a good rental return of approximately $300-$340  to per week, which would represent a solid net yield.

The report notes the big influences looming for 2012 on eastern suburb property markets were largely dependent on the current economic climate in the US and Europe.

“As a result high end markets such as the eastern suburbs will be worst affected if the predicted white collar recession eventuates,” HTW notes.

“The coming year will still present opportunities in the lower to mid range Eastern Suburbs, as well as mid range dwellings in the Botany Bay, Leichhardt and Marrickville LGAs.”

The expectations in north-west Sydney were generally “pretty positive: with the residential market expected to remain fairly steady”.

The report noted the area was still growing at a fairly rapid rate with major land subdivisions and new estates in the Hills/Blacktown area (The Ponds, Rouse Hill, Ropes Crossing, Bunya Estate at Doonside) and Penrith (Jordan Springs, Waterside development at Cranebrook, Glenmore Park and Claremont Meadows).

In the southern suburbs the report noted the proposed Sharks residential/commercial development at Woolooware as one watch along with work on the light rail extension through the inner west, as another significant property price shaping event.