Is buying a property in Kensington a good investment?

Last updated on December 29, 2023

Yes, the analysis of Sydney's property market is included in our pack

If you've appreciated the leafy streets and educational excellence of Kensington, you may have thought about calling this prestigious Sydney suburb your tranquil and sophisticated residence.

Is it a good idea though? What's the current state of the real estate market in that area? Are property values appreciating or depreciating? Are investors seeing returns on their real estate investments? How's the demand for rentals?

We'll answer all these questions for you! When building and updating our property pack for Australia, our team has been researching and surveying this area. In fact, there is significant customer interest in investing there. Therefore, we believe it would be beneficial to include some information about it in our property pack.

Why do property buyers like investing in Kensington?

Kensington, located in Sydney, has emerged as a highly sought-after location for property buyers, and there are several reasons why it's gained this popularity.

To begin with, its unique attributes set it apart from other real estate markets in Sydney. Unlike many bustling urban areas, Kensington offers a blend of both city convenience and suburban tranquility. This rare combination is hard to find in other Sydney neighborhoods.

One of the key factors that make Kensington attractive is its proximity to essential amenities and Sydney's central business district. This means shorter commutes for professionals and easy access to a range of shopping, dining, and entertainment options.

Compared to more remote suburbs, living in Kensington saves precious time and energy, which is a significant plus in today's fast-paced world.

Kensington's rise in popularity can be traced back over the past few years. This trend has been fueled by various developments in the area, including infrastructural improvements and an increase in quality residential projects.

The question of whether this popularity will sustain is backed by observing ongoing developments and the steady demand for properties in the area. Kensington's continued growth and development suggest that its appeal is not just a passing trend.

The type of people attracted to Kensington is diverse, but generally, it includes young professionals, families, and students. The presence of the University of New South Wales nearby makes it a convenient location for students and academic professionals. Families are drawn to the area because of its safety, community feel, and good schools.

However, like any place, Kensington has its drawbacks. The property prices here tend to be on the higher side, reflecting its desirability and location advantages. This could be a barrier for some potential buyers.

Moreover, the area can be quite busy, especially near the university, which might not appeal to those seeking a quieter, more secluded living environment.

Overall, Kensington offers a unique blend of urban convenience and suburban peace, making it a standout choice in Sydney's real estate market.

While it does have some limitations, its advantages continue to draw a wide range of residents, suggesting its popularity is well-founded and likely to persist.

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Why is Kensington a nice place to live?

Kensington offers a distinctive lifestyle that blends urban vibrancy with community warmth, making it a sought-after place to live.

The area's culture is characterized by a blend of historic charm and modern living, creating an environment that's both dynamic and comfortable. You'll find a rich tapestry of cultural influences here, reflected in the diverse food offerings, community events, and architectural styles.

One of the notable aspects of Kensington is its expat community. Thanks to its welcoming atmosphere and strategic location near the city center and universities, it attracts a global crowd.

This mix of people from different backgrounds adds to the area's cosmopolitan feel, making it an exciting place for those who enjoy cultural diversity.

Living in Kensington does come with a cost. It's important to know that the real estate prices and general living expenses here are relatively high compared to other suburbs in Sydney. This is partly due to its popularity and the amenities it offers.

Safety is a key consideration for any residential area, and Kensington fares well in this regard. It's generally considered a safe neighborhood, though, like any urban area, it's always wise to be mindful of your surroundings.

Kensington is well-equipped with various amenities and facilities. For families, there are reputable schools like Kensington Public School and Our Lady of the Sacred Heart College.

In terms of healthcare, the Prince of Wales Hospital is nearby, offering excellent medical services. Shopping enthusiasts will appreciate the local boutiques and nearby shopping centers like Westfield Bondi Junction.

The quality of infrastructure in Kensington is commendable. The roads are well-maintained, and utility services like water and electricity are reliable. Internet connectivity is generally good, which is a plus for professionals and students who rely heavily on digital connectivity.

Accessibility is another strong point of Kensington. It’s well-connected to other parts of Sydney, making commuting relatively hassle-free.

The area is serviced by a network of buses, and with the recent introduction of the light rail, getting to places like the CBD, Randwick, and the Eastern Suburbs has become even more convenient.

Public transportation options are varied and efficient. The bus network covers numerous routes, connecting residents to key areas in and around Sydney. The addition of the light rail has further enhanced the connectivity, providing a quick and eco-friendly travel option.

How much does it cost to buy real estate in Kensington?

If you need a detailed and updated analysis of the prices, rents and yields, you can get our full guide about real estate investment in Australia.

When looking into the cost of buying property in Kensington it's important to first understand the types of residential properties available.

This area offers a diverse range of options, including apartments, traditional houses, and, to a lesser extent, luxury villas. Each type caters to different lifestyles and preferences.

In Kensington, apartments, particularly modern units close to amenities like the University of New South Wales and the Prince of Wales Hospital, are in high demand.

This demand is driven by the area's popularity among students, professionals, and young families who value the convenience and low maintenance lifestyle that apartments offer.

The property market in Kensington is a mix of new developments and resale properties. In recent years, there has been a push towards modern apartment complexes, which are attractive to both investors and those looking to live in the area.

Regarding the price range, Kensington is considered a premium suburb, and this is reflected in its property prices. While specific numbers can vary, the cost per square meter tends to be higher than many other Sydney suburbs.

For a more precise figure, it's advisable to consult current real estate listings or a local property expert, as these values can fluctuate based on the market and specific property characteristics.

Over the recent years, property values in Kensington have shown a trend of steady growth. This increase can be attributed to the suburb's ongoing popularity, its proximity to the CBD, and the general upward trend in Sydney's property market.

Looking ahead, there are always factors that could potentially affect property values. Any upcoming developments, city planning changes, or improvements in transportation infrastructure can play a significant role.

Predicting the future real estate market in Kensington, or any area, involves a degree of speculation.

However, given its established popularity, ongoing demand, and the trend of steady growth, it's reasonable to anticipate that property values in Kensington may continue to rise.

Specific factors that indicate a potential increase in value include the suburb's continued desirability due to its location, lifestyle offerings, and any future enhancements in infrastructure and amenities.

These aspects make Kensington an attractive prospect for property buyers, suggesting that investing in this area could be a wise decision.

Where is the best area to buy a property in Kensington?

Finding the best area to buy a property in Kensington depends on various factors, including your lifestyle preferences, the type of property you're seeking, and your budget.

Different parts of Kensington have distinct atmospheres and offer various types of properties. For example, areas closer to the University of New South Wales tend to have a more youthful, vibrant vibe.

This part of Kensington is characterized by a mix of modern apartment complexes and older-style units, making it popular among students and academics. The property prices here can be relatively high due to the demand driven by proximity to the university.

On the other hand, the areas closer to Centennial Park offer a more serene and leafy environment. This area is more residential, with a mix of larger, family-sized homes and upscale apartments.

The proximity to the park, as well as to top-rated schools, makes it a desirable location for families. As you might expect, property prices in this area can be quite high due to these desirable features.

For those looking at potential investment opportunities or up-and-coming areas within Kensington, it's worth exploring regions that are undergoing development or regeneration.

Newer developments can sometimes offer more affordable options while still providing modern amenities and the potential for property value growth.

When considering where to buy, areas around Anzac Parade are worth exploring. This bustling thoroughfare offers easy access to shops, restaurants, and public transport, making it a convenient and attractive location.

The availability of newer apartment developments alongside older homes provides a range of options for potential buyers.

Conversely, areas that might be less advisable to buy in are those that are prone to heavier traffic or noise, especially areas close to major roads that may impact the living experience.

Additionally, properties that are farther from public transport links or essential amenities might not appeal to those who prioritize convenience and accessibility.

Ultimately, the best area in Kensington for you to buy a property will depend on your individual needs and preferences. Whether you prioritize a bustling, urban atmosphere, the tranquility of a residential neighborhood, or the potential for investment growth, Kensington offers a variety of options to suit different tastes and budgets.

Here is a summary table to help you visualize better. If you need more detailed data and information, please check our property pack for Australia.

Area	Atmosphere	Property Types	Price Range
Near UNSW	Youthful, Vibrant	Modern Apartments, Older Units	High
Near Centennial Park	Serene, Leafy	Family Homes, Upscale Apartments	Very High
Developing Areas	Varied	New Developments	Moderate to High
Anzac Parade	Convenient, Busy	Mixed	Varied
Areas far from Transport	Less Convenient	Varies	Lower

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Is there a strong rental demand in Kensington?

In Kensington there's indeed a strong demand for rental properties, driven by several factors including its location, amenities, and the presence of educational institutions.

The rental market in Kensington caters primarily to long-term rentals. This trend is largely influenced by the area's demographics, which include university students, healthcare professionals working in nearby hospitals, and young professionals.

The proximity to the University of New South Wales makes student accommodations particularly in demand. These students typically look for stable, year-round housing close to the university.

The profiles of potential tenants in Kensington are diverse. Students often seek affordable, low-maintenance living spaces, such as studio or one-bedroom apartments.

Young professionals and healthcare workers might opt for one or two-bedroom apartments that offer a balance of comfort and convenience. Families might be drawn to larger apartments or houses that provide more living space and are close to local schools and parks.

Specific areas within Kensington that are particularly attractive for rentals include those near the university and the Prince of Wales Hospital. Properties in these areas are likely to see less vacancy due to the constant influx of students and healthcare professionals.

Additionally, areas with good access to public transport, like those near Anzac Parade, are also popular, as they provide easy commutes to the CBD and other parts of Sydney.

Certain amenities can significantly reduce vacancy rates. These include reliable internet connectivity, which is essential for students and working professionals, and proximity to local amenities like shops, cafes, and public transport. Properties that offer these features tend to be more attractive to potential tenants.

When it comes to potential returns on investment, properties in Kensington can be quite lucrative, although the exact numbers would vary depending on the property type and location.

Generally, you can expect a decent yield, especially for properties that cater to the steady demand from students and professionals. Smaller apartments, which are lower in cost but high in demand, often offer higher relative yields compared to larger, more expensive properties.

In terms of properties gaining increasing demand and potentially better yields, smaller apartments, particularly those that are well-maintained and conveniently located, are seeing a rise in popularity.

Their affordability and practicality make them a preferred choice for a large segment of Kensington’s rental market.

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Is it easy to buy a property as foreigner in Kensington?

Before we answer the question, please know that we have an article dedicated to the experience of buying real estate as a foreigner in Australia.

Buying property in Kensington, Sydney, as a foreigner involves navigating certain regulations and understanding the local property market.

Australia has specific rules for foreign property investment, which can impact the ease of purchasing.

Firstly, foreign buyers in Australia are subject to regulations set by the Foreign Investment Review Board (FIRB). These regulations often require foreign investors to gain approval before purchasing property, especially residential real estate.

Generally, the FIRB allows foreigners to purchase new properties or vacant land for development but purchasing existing residential properties is typically restricted.

The purchasing process in Kensington, like the rest of Sydney, is straightforward but does have its complexities. It usually involves property viewing, making an offer, getting approval from the FIRB if necessary, and then proceeding to the exchange of contracts and settlement.

One of the primary risks associated with property investment here is the fluctuating real estate market, which can affect property values. Additionally, being unfamiliar with local market trends and property laws can pose a challenge.

A common pitfall for foreign investors in Australia is underestimating the impact of additional costs such as stamp duty, legal fees, and possibly higher interest rates for non-resident buyers.

In New South Wales, for instance, foreign buyers are subject to an additional stamp duty surcharge. Another unique aspect to consider is the tax implications, both in Australia and in the investor's home country.

Working with a local real estate agent or lawyer is highly advisable. A local expert can provide valuable insights into the Kensington property market, help navigate the legalities and FIRB requirements, and assist in identifying properties that meet your investment criteria. They can also help avoid common pitfalls and ensure a smoother transaction process.

Common exit strategies for property investors in Kensington include selling the property for capital gain, especially if the market has appreciated since the time of purchase, or leasing it out to generate rental income.

The choice of exit strategy would depend on the investor's goals, market conditions, and individual circumstances.