Buying a property in Sydney: a complete guide

All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.

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

Considering buying real estate in Sydney? You're not alone!

Many people are captivated by Sydney's coastal allure and dream of owning a beachfront property or a stylish apartment in this city.

Does it make sense from a financial perspective, though? Are property prices increasing in Sydney? What is the price per sqm? Should I buy property in the CBD or Bondi Beach? What are the taxes? Which places offer rental yields exceeding 7%?

We have the answers.

The BambooRoutes team has thoroughly explored this market. As a matter of fact, we've compiled all our findings in one pack. Get it now.

In the lines below, we'll share useful information and some practical tips.

How's the real estate market in Sydney?

Is the property market doing fine or not? A data-driven analysis will give us the answer.

Property types

In Sydney, there are various types of properties available for sale.

These include houses, which are standalone dwellings with their own land, providing more privacy and space.

Apartments, also known as units or condos, are typically part of a larger building and may offer shared amenities like gyms or pools. Townhouses are attached properties with multiple levels, offering a blend of house and apartment living.

Additionally, there are vacant lands available, providing the opportunity to build a custom home.

Sydney's property market also includes commercial properties such as offices, retail spaces, and industrial units for business purposes.

Whether you're looking for a cozy apartment, a spacious house, or a commercial space, Sydney's real estate market caters to a diverse range of property preferences.

Should you buy or rent?

(If you're keeping it for yourself and not renting it)

If Sydney, the iconic Australian city, has caught your interest as a place to settle, you might be thinking about the pros and cons of buying versus renting a property.

Without a doubt, you should buy if you want to acquire equity and take advantage of potential capital gains in the Sydney property market.

Want to make a good decision? Check out the property price-to-rent ratio. You can think of it as the time it takes for rental income to equal the property's current purchase price.

According to Numbeo, the property price-to-rent ratio in Sydney is around 31.12, which is significantly above the world average.

This value shows that it would take you 31 long years of paying rents before you can own a property in Sydney. You'd better spend that money on the house ownership directly.

Housing prices in Sydney

On average, according to the last reported data from CoreLogic, buying a property in Sydney would cost you around $10,810 per square meter.

Naturally, things are quite spread out. A waterfront property in Sydney might have a different price per square meter than a house in the Eastern Suburbs. We actually give you a more detailed breakdown in our pack for buying property in Sydney and in Australia.

To help you understand better, it is similar to the property prices you can find in Paris currently.

Also, housing prices in Sydney are higher (37%) than in Melbourne.

The most expensive neighbourhoods in Sydney are probably Point Piper, Darling Point and Vaucluse, while the cheapest neighbourhoods are likely to be Auburn, Bankstown and Fairfield.

Trends

First and foremost, we have to acknowledge that Australia is, today, one of the most stable countries in the world. The last Fragile State Index that has been reported for this place is 22.7.

Don't overlook this while weighing the pros and cons of buying a property in Sydney.

Also, according to the International Monetary Fund (IMF), Australia's economy is expected to soar by 8.8% in the coming 5 years, resulting in an average GDP growth rate of 1.8%.

If you want to invest in real estate in Sydney it's a good thing because when the economy grows, people tend to become wealthier, which usually results in higher housing prices.

Also, in Australia, the average GDP per capita has changed by 4.0% over the last 5 years. The growth, although minimal, is still present.

This is a strong positive signal: housing prices in Sydney might become more expensive in 2024 and later on.

However, if we look at the UBS Global Real Estate Bubble Index, we can see that the Sydney property market is currently overvalued (the index is at 1.19, above 0.5 means overvaluation).

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Australia right now.

Buying property in Sydney

It can be difficult to buy property in Sydney due to the difficulty of obtaining reliable and up-to-date information for the buying process. That's why we have created the pack to buy property in Sydney and in Australia.

Buying process

In our pack, we've laid out all the steps involved in the buying process, including the required documents, taxes to be paid, and guidance on finding properties.

Now, we're giving you a more straightforward version to help you grasp the information more easily.

This is the step-by-step process to purchase a property in Sydney:

1. Set a budget and get pre-approved for a mortgage with an Australian bank.
2. Research the Sydney property market and target suburbs with growth potential.
3. Engage a licensed real estate agent familiar with Sydney's property market.
4. View and inspect properties, considering proximity to amenities and public transport.
5. Conduct a title search and obtain a Section 10.7 Certificate from the local council.
6. Make an offer through the agent and negotiate the price with the seller.
7. Sign a Contract for Sale, which includes a Cooling-Off Period and 10% deposit.
8. Conduct a building inspection and review the Strata Inspection Report (if applicable).
9. Organize financing, including Foreign Investment Review Board approval if a foreign buyer.
10. Complete legal paperwork, including Transfer of Land and Stamp Duty Declaration.
11. Attend settlement with your solicitor and pay the remaining balance.
12. Transfer ownership and receive the keys, finalizing the property purchase in Sydney.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Australia.

Make a profitable investment in Sydney

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Where to find a property

Discover these websites to find properties in Sydney:

• Realestate.com.au - A comprehensive platform for real estate services, providing property listings, mortgage information, suburb research, and the latest property news.
• Domain - A property portal offering a wide range of real estate services, including property listings, home loans, new developments, and news updates.
• Flatmates - Australia's largest share accommodation website, connecting individuals looking for shared homes or flatmates.
• Allhomes - A real estate website providing various property services, including buying, renting, selling, and commercial properties.
• Realcommercial - The leading destination for commercial property, offering a wide range of listings, investment opportunities, news, and agency information.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Australia.

What you can get

As mentioned before, the average price per sqm in Sydney is $10,810. A 1-bedroom property with an area of 60 square meters would cost approximately $649,000, while a 2-bedroom property with an area of 85 square meters would cost approximately $919,000.

However, prices will change based on both the property itself and its location.

Prices are steeper in the upscale parts of Sydney. A residence in Darling Point might come to around $2,630,000, whereas an apartment in Double Bay could be priced at $1,150,000.

Certainly, certain areas are more affordable. You may find a residence in Blacktown for $1,070,000, or a residence in Mount Druitt priced only at $680,000.

We give a more detailed breakdown in our full pack for buying property in Australia.

Common mistakes

Here are the main pitfalls specific to buying property in Sydney, Australia:

• Foreign investment rules: Strict regulations apply to non-resident buyers, limiting eligibility for certain properties.
• Bushfire risks: Certain areas are prone to bushfires, requiring careful assessment of property location and insurance coverage.
• Flood-prone zones: Some regions are susceptible to flooding, necessitating flood risk evaluations before purchase.
• Heritage-listed properties: Owning heritage-listed buildings may restrict renovation options and require adherence to preservation guidelines.
• Pest inspections: Sydney's warm climate can attract pests, necessitating comprehensive pest inspections before buying.
• Strata reports: Obtaining detailed strata reports is crucial for apartments to assess building maintenance and financial stability.
• Land contamination: Historical land usage may result in contaminated sites, requiring environmental investigations for potential health hazards.
• Zoning restrictions: Local zoning laws can impact property use and development plans, affecting long-term investment prospects.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our Australia Property Pack

Living in Sydney

Living in Sydney is an exciting and vibrant experience, with plenty of activities, events, and attractions to explore, making it an ideal city to call home.

Cost of living

The cost of living in Sydney is generally considered to be quite high, especially when compared to other cities in Australia. The cost of housing, transportation, and other basic necessities is typically more expensive than the national average.

Here are some examples to better understand the cost of living in Sydney, Australia:

• Rent for a one-bedroom apartment in the trendy neighborhood of Surry Hills: $3,000 per month.
• A meal at a local restaurant with "Meat Pie," a classic Australian dish: $20.
• Monthly Opal card for public transportation: $180.
• Utilities (electricity, water, heating) for a small apartment in Darlinghurst: $160 per month.
• A cup of "Flat White," a popular Australian coffee style: $5.50.
• Ticket to the "Sydney Opera House" tour: $30.
• Monthly membership at a popular fitness chain like "Fitness First": $110.
• A bottle of "Bundaberg Ginger Beer," a well-known Australian soft drink: $3.

Neighbourhoods

We like to present data in an easy-to-understand way. So, we made a table that shows the different areas in Sydney. For yields, prices and rents, check our property pack.

Life in Sydney

The economic landscape in Sydney is largely driven by the service sector, which accounts for the majority of the city's GDP. Additionally, Sydney is a major financial center and is home to many large corporations and industries such as banking, finance, media, and technology.

Examining the IMF's data, Sydney's GDP constitutes nearly 23% of Australia's GDP. It's nice because people in cities with strong economies usually get better services, which makes life better.

What expats usually like the most in Sydney is the vibrant cultural life, with its many festivals and events, and the stunning beaches and natural beauty.

Regarding safety, the crime rate of Sydney is around 34, which is not concerning. Sydney has a low crime rate due to its strong economy and high quality of life, which has resulted in increased investment in public safety and crime prevention initiatives.

A good point for a property investor - Sydney has an extensive network of trains, buses, ferries and light rail that makes up its Mass Rapid Transit (MRT) system.

Access to healthcare in Sydney is excellent, with a Healthcare Index of 73. A strong healthcare system and infrastructure will always make a place more attractive, which is positive for real estate.

Finally, it is worth noting that Sydney has four universities ranked in the top 200 worldwide: The University of Sydney, UNSW Sydney, University of Technology Sydney and Macquarie University.

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Renting out in Sydney

For those aiming to buy property solely for renting out and earning income.

Long-term

Tenant Profiles in Sydney

According to the data reported by Wikipedia, the home ownership rate in Australia is 66%, which is average.

It means that, if you decide to buy and rent out in Sydney, there will be a good number of people who can become your potential tenants.

If you decide to buy and rent out to long-term tenants, you should target young professionals, students, and families looking for affordable housing in Sydney's inner-city suburbs. Additionally, you can also target those seeking short-term rentals in the city's more expensive areas such as the Eastern Suburbs and the North Shore.

Here is a little summary table we've made for you.

Rental yields

As of today, rental yields in Sydney are floating around 2 or 3%. It's low. A good rental yield is typically considered to be around 7% or higher.

Properties in highly sought after areas such as the inner city suburbs of Sydney tend to give the best rental yields as they are in high demand and attract higher rents. Additionally, properties with multiple bedrooms and bathrooms tend to generate higher rental yields as they are more attractive to tenants.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Short-term

You could also decide to rent short-term to business travelers, vacationers, students, and other people visiting Sydney for short periods of time. Additionally, you could also target people who need temporary accommodation while relocating to the city.

If you decide to go with that option, look for properties in the suburbs of Pyrmont, Potts Point, and Surry Hills. These areas are popular with tourists and have higher rental yields.

You will have some competition though - there are around 13,000 Airbnb listings in Sydney. The average daily rate stands around $191, which is quite high.

You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Sydney can make around $2600 per month. Also, the average occupancy rate is estimated at 77%.

Is it worth buying real estate in Sydney then?

Buying a property in Sydney is a significant financial decision, and it's essential to weigh the pros and cons carefully. On the positive side, if you plan to establish roots in Sydney for the long haul and aim to build equity over time, it can be a prudent choice. Sydney boasts a stable economy, ample job opportunities, and a vibrant lifestyle that many find appealing. However, be prepared for the high cost of entry, as property prices in Sydney can be exorbitant, requiring substantial financial resources or a sizable mortgage.

Moreover, it's crucial to consider the rental market in Sydney. Currently, rental yields in the city are relatively low, hovering around 2-3%. This means that if you are counting on rental income to offset expenses, you may want to explore alternative investment options that offer higher rental returns.

Conversely, if you are an investor seeking quick returns or short-term profits, Sydney's property market might not align with your goals. The market is currently considered overvalued, as indicated by the UBS Global Real Estate Bubble Index, which raises the possibility of a future price correction. Additionally, non-resident buyers face stringent regulations, adding complexity for international investors.

Furthermore, Sydney's property market presents specific challenges, such as areas prone to bushfires, flood risks, and zoning restrictions. These factors can increase maintenance costs and the overall complexity of property ownership.

In summary, while Sydney offers an appealing lifestyle and the potential for long-term equity growth, it may not be the best fit for investors seeking rapid returns or high rental income due to its high property prices and low rental yields. Successful participation in Sydney's property market requires careful financial planning and a commitment to a long-term investment strategy.

Make sure you understand the real estate market in Sydney

Don't rush into buying the wrong property in Australia. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.