What will Sydney's long and lengthening commute times do to property?
I hate being stuck in traffic and, if you’re like most Australians, so do you.
So if you’re a Sydneysider it’s unlikely to surprise you that a recent NSW Department of Transport survey reports that except for New York City, Sydney now has the longest reported commute time in the world.
In fact, the average Sydney commuter spends nearly an hour longer travelling to work each week than the average Los Angeles commuter, as Sydney's average work trip travel time have blown out to 34.3 minutes one-way.
Even longer commutes ahead
And as if that isn’t bad enough, Sydney's densification planning policies seem likely to lengthen commute times even more in the future.
It is therefore not surprising that more and more people are swapping their backyards for balconies and choosing to live in Sydney’s inner suburbs, with demand coming not only from young people but families wanting to live closer to the city.
The result is a shortage of established apartments that is pushing up property values and rents.
Residex www.residex.com.au reports that Sydney apartment rents increased almost 10% over the last 12 months and, in certain areas, such as pockets of the inner-west, the rate of increase has been significantly higher than this.
The Sydney market is segmented
On the other hand, at the upper end of the market, luxury house prices have faltered, as have home values in the outer suburbs.
However, with the undersupply of good near-city apartments pushing up rentals, first home buyers are coming back to the market. At the same time, savvy property investors are getting ready for the next stage of the cycle.
The good news is the Sydney property market is moving out of the doldrums, but it doesn’t mean the next boom is upon us.
Typically, the next stage of the property cycle is the stabilisation phase. Buyers come back and slowly more sellers, including some who couldn’t move their properties over the last few years, are going to put their properties back on the market and we’ll have a period of unspectacular growth.
What smart property investors are doing
Over the next year strategic property investors are going to set themselves up for the next Sydney property boom by buying the right type of property at the right price.
They will have learnt from the last few years and rather than speculating, they will buy a property with an element of scarcity that will be in continual strong demand by owner occupiers (because these are the ones who push up property values) and tenants.
Others who sit on the sidelines will look back in a few years time and say, “I wish I’d bought in 2012”.
I’ll be sharing my thoughts on the Sydney property markets at my upcoming National Property Market and Economic Updates around Australia. Click here for further details.
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