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A new report has found the white-hot Sydney market has not been the great performer it has been hailed as.
The findings by property research group SQM Research show some Sydney enclaves had dropped in price by as much as 8.5 per cent in recent times; while it's been the cheaper, outer suburbs that have proven to be the boom areas.
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Sydney's leafy lower north shore was the worst performer with the report stating prices had actually gone backwards by 8.5 per cent over the past three years, compared to the overall Sydney average, which had risen a staggering 23.1 per cent.
The report's author, Louis Christopher, said the problem for the lower north shore was threefold. It was deemed too expensive – with average prices over the $2 million mark. There'd been a distinct lack of investor interest, which had been the primary driver for the rest of Sydney. While Mr Christopher believed the area never recovered from the 15-plus per cent fall it suffered back in 2011.
"The reality is the majority of free-standing homes in the lower north shore are priced at or above the $2 million mark and this is the primary reason why this region has seriously underperformed," Mr Christopher said.
Surprisingly, Sydney's sought-after eastern suburbs were another area on the list of underachievers. Although the area had enjoyed price increases of 9.5 per cent over the past three years it was still well below the city's average.
Again, Mr Christopher believed the area had not bounced back from the correction it suffered in 2011 and its high prices were a turn-off for buyers and investors.
The northern beaches also made the 'underperformer' list despite increases over the past three years of 17.5 per cent. Mr Christopher believed it was the peninsula's chronic road congestion and dire public transport that were the main reasons buyers baulked at the area.
Mr Christopher said buyers – namely upgrading families with kids – were passing over these areas in favour of "the middle ring and outer rings of Sydney and strangely that is where the price gains have been the greatest".
"The interesting part in all this is that the price gap between affluent and affordable real estate in Sydney has narrowed up," he said.
"There is no question about this. I think too that for those who do have budgets up to $1.7 to $1.9 million, they should consider taking a look at the real estate that is just above the $2 million mark, for there may well be some large quality differences for not that much, just a few extra purse strings."
