NSW Good time to buy a unit in Western Sydney?

Hi All,

I have been re-evaluating my investment strategy (originally looking at greater Brisbane) as with the current growth, most of the best opportunities have already exceeded my budget (currently constrained by low deposit). I am now focusing on sub 400k buying opportunities. Originally I was looking at houses but discovered 2 bedroom units (brick, low rise) going for 350k - 380k near Parramatta (Auburn, Harris Park, etc).

I'm now thinking this presents a good buying opportunity as with the lack of international students and the overwhelming popularity of houses, units in Western Sydney have been overlooked and dismissed. I know buying units grow less over time and haven't had the surge that houses have (maybe this is a good thing though, as it means I haven't missed the boat), but there is some extra benefits that fit with my personal circumstances:

• I live 40min away so can easily move in there and live for 1+ years for the stamp duty concession. The costs of living there would also be 100 - 150/week cheaper overall compared to where I am currently renting.
• Low demand gives me stronger negotiating power and ability to get those bargains
• I can live there for as long as the covid crisis lasts and move out when rental demand increases if I want to move somewhere more desirable for myself
• Much cheaper moving costs and life imposition compared to moving to Brisbane for a year to get the first home stamp duty concessions

What are peoples thoughts on this strategy? Do you think there are other locations that might be better for <400k?

Thanks!

 

It completely surprises me you could buy a 2br unit in Harris Park for this sort of money. RP Data shows the prices haven't really changed since 2015.

Anyway, if it suits you, I dont think it's a bad idea. Harris Park is walking distance to Parramatta which gives it a tick from me. And as the Parramatta region becomes more popular, maybe old 3 storey walkups in the suburb could become even higher density.... but I don't know, will it or won't it happen. And generally, houses are the stock to buy, but you can't afford one in Sydney right now.

I'd want a decent balcony, internal laundry, other owners who care about the building....

Just a question, do you still get a stamp duty concession on existing property? Is that a NSW or Queensland benefit?

For Brisbane area for that budget I'd definitely buy a house. But not in a flood prone area.

 

I had another look and the unit that popped up in Harris park in particular was an investment only one you cant live in. You're right in that the others in the area go for >420k. There are units in the outer band around Guildford, Granville, Auburn so I'd probably be looking in those areas. Or would it be better to spend an extra 60k+ to get closer to Harris Park?

I've rented in a couple low rise brick apartments now (in one currently) so feel I could sus out any the decent ones.

Seeing the drop and stagnation since 2014 in your chart might be a good thing? Means I havent missed any major growth cycles yet. I feel they could easily increase past 500k (based on nothing but gut feel) over the years with all the population growth and development in Parramatta, WSA, etc.

The other option I was looking at are units around Liverpool. There seems to be a much bigger supply available but also with the population growth and development around there, I dont know if that would be a better or worse option. I'd be looking at a 5 - 8 year horizon from buying to selling.

For QLD, I'd get the stamp duty concession but it's a much bigger cost and imposition for me to move all the way up there then come back to Sydney afterwards. I'd also be forced to buy without seeing in person and the market seems quite hot so harder to negotiate a bargain atm.

 

I tend to think for Sydney units in non descript areas, I really don’t know what might be a growth driver for them. There’s always newer units coming to compete against. No great way to say this but your budget is really low. For Sydney, it’s land that is really appreciating. Your best unit buy may just be one that a developer will later buy and redevelop into High-rise.

For that reason, I might look for a house in Brisbane or Perth instead.

 

Personal opinion incoming, but here's the reason why they stood out to me as unusually good value. I currently rent in a 2 bedroom brick, low rise apartment in the shire. It sits on a noisy road but is within 7min walking distance to the westfield and 15min drive from Cronulla beach as redeeming factors. It takes over 45min by train to get into the CBD with no other major work prospects nearby and yet it's valued between 650k+ - 800k.

I don't understand how an identical apartment in Harris Park, which is a quiet leafy suburb, walking distance to Parramatta CBD, 35min train to Sydney CBD and access to WSA and future Liverpool CBD can cost 300k LESS than one in the Shire. This is ignoring houses but comparing like for like apartments. Besides being able to drive to the beach down here and maybe demographic differences, I cant justify the price difference in my head.

I think because of the disruption of covid and border lockdowns, everyone has rushed to to the outskirts with an intense obsession on houses (plus international students, immigration, etc being shut down). This caused a suppression on prices for apartments and those especially in close proximity to the CBDs.

While I think some people will remain in the outskirts, I also believe that there will be a rebound back towards the CBDs in addition to immigration restarting and infrastructure development, gentrification, etc.

I have been studying the Brisbane market for a while now and it is insanely hot, which means a lot of growth potential is already priced in and I would have to compete with a lot of other buyers (impossible to negotiate a good deal). The only areas still under 500k are in the outskirts with heaps of land available and nowhere near the same job prospects as in Sydney.

But maybe I am completely misreading the situation, so would be good to get others thoughts.

 

I'm astounded at how low priced these old units in the west and south west are. Shocked and disappointed also because I got a 2 bedda in the south west.

I don't think they can stay this low for long.

I've got a strategy where I am contemplating buying an adjoining unit to mine and then leasing both out as one. Ideally for a family that wants 4 bedrooms, 2 kitchens, 2 bathrooms, balconies and garages.

Walk to schools, uni, shops and station. $700 pw.

 

That's an interesting idea, I wonder if it's easy to get strata approval to knock a hole in a wall to join them together. Considering you could get two units for close to the price of one down here in the Shire, something really does seem off in the market!

Just look at the growing disconnect of unit prices in the chart I attached.

Most people see that and think 'falling prices', run away. But I cant see that drop being maintained for long, those prices have to be close to bottom of the market and can only go up from there.

 

I don't think it can last too long.

Getting strata approval to knock down a wall would be a good idea if it can be easily done. Strata, council, other lot owners may not like it. I'm thinking, keep it simple.

Sure, the tenants have to walk a few metres through common property to get from one unit to the other but I don't think it's a big deal.

 

Sounds like a good plan--and with your trade skills just cut the wall out and and instant income..
Not sure about the insurance costs as with that number of people what could go wrong..

 

All you'd really need is a hand held concrete saw. A diamond tip blade will go through the wall like a hot knife through butter. Keep the dust down with vacuums. Slip in a lintel. Bit of render and bingo.

 

How does one look for this kind of stock? What do your need to do to find properties in the right zones and ones that developers are likely to want?

 

I wish I had the insider knowledge!

 

It's a good time to buy a house In regional QLD

 

I've been researching more into the suburbs surrounding Parramatta and want to get peoples thoughts on the which suburb has the best reputation/growth potential.

My broker confirmed some suburbs have been red flagged by the banks and require a higher minimum deposit (Parramatta, Holroyd, Harris Park, Granville) and others are ok (Merrylands, North Parramatta). Still waiting to hear back on Mays Hill, Rose Hill and Westmead.

I understand there has been a massive oversupply of high rises with poor planning in the Granville area especially the past few years, but looks like the council has cracked down on it now and is reviewing all future developments carefully. So it may take 2-3 years for all this extra supply to flush through the system but then see strong growth potential past that.

I've narrowed down my areas of interest to Harris Park and Merrylands at this stage as I can get in both for <450k.

Harris Park is mostly marked as a conservation area and wasn't sure if this is a good or bad thing long term. On the one hand it means developers cant build high rises so I wont be selling to a developer for profit, but then it means the housing density is already at it's max and cant increase more in the future (so should see prices rise). If I were to buy in Harris Park, I'm looking for 2 bed units with a garage and decentish views (not 3 metres away from the neighbours window). I think I might be able to haggle for around 420 - 430k for one of these if the market is still weak.

On the other hand, Merrylands isn't flagged by the bank so much easier to get financing (but this might mean more competition from buyers) and there are more units on the market at the moment and going for cheaper. So I could also get a 2 bed unit with garage for maybe 390k - 410k.

I feel like Harris Park might become one of the more premium suburbs in the future compared to Merrylands, but was wondering which of the two seems to be the better buy?

 

My unit in Berala/Auburn has not had any CG since I bought it in 2015. (390K). 3 storey old brick unit. People are struggling to sell theirs in this market

 

What abt St Marys? Direct train to new airport?

 

How about Liverpool and Warwick Farm ? Sydney's Third CBD in the making, With 2x Universities, Liverpool Hospital and Private Hospital, Westfield and the New Georges River Precinct in planning. See Georges River Precinct Plan - Arcadia Landscape Architecture

There is also a FAST Transit to the new Airport in the pipeline Fifteenth Avenue Smart Transit (FAST) Corridor


Most of the land around Liverpool CBD are gone and if one can find a good deal it may work. Older units could be secured under 400K (2 bed 1 bath with secured lock up Garages)

 

Considering your circumstances, I would say you can't go wrong. By living in the unit, you instantly add value. Harris Park is an excellent area and really convenient. It's really underpriced atm - it has come down quite a lot but prices have been inching up again - hopefully because more Aussies are taking advantage of low buy-in and low rents in an excellent area.
The strong demand of yesteryear will return in due course but in the meantime, I'm happy to see locals moving back to the area. International students are great but you can sometimes have too much of a good thing. A balance will only strengthen the area and make it more attractive when things reheat further down the track.
I have never regretted buying in the area or living there for a while. It has been a great boost to my 'strategy'. Get in at the right time - a rock.
BTW agree with thoughts vs Merrylands. Quite different areas due to different buildings and different demographic. Either way is cool but for different reasons.
Wow didn't know HP conservation now. That's good news.
IMO the bank is out of date re Nth Parra etc which has always been viewed as a 'more desirable' area but ... really?