Residential construction activity remains buoyant across select parts of Sydney despite media discourse about the property market reaching an unsustainable peak. In particular, strong demand continues for luxury residential development in suburban hotspots near the CBD.
The inevitable downturn we are currently witnessing is dampening consumer sentiment regarding the residential sector but forward-looking drivers may suggest otherwise.
Ongoing population growth & migration
According to Savills Research, Sydney has been the prime beneficiary of the ongoing surge in overseas migration into Australia throughout the past 10 years, boosting the city’s population to 5.1 million people as of August 2018.
New South Wales’ population grew at a rate of 1.4 percent throughout the year to March 2018, with approximately 113,000 people added to the state.
The majority of this was due to the ongoing immigration cycle, with more than 85,000 overseas migrants settling in Sydney over the same period – accounting for about 40 percent of all overseas migrants who settled in Australia.
While net interstate migration for the state has been notably negative, resident migration out of Sydney has been concentrated in three Sydney districts – the inner south-west, the eastern suburbs and Parramatta.
North Shore suburbs remaining popular
Suburbs on the Lower North Shore remain prime destinations for residents and overseas migrants alike, with developments in St Leonards and Crows Nest earmarked for more than 4,600 new dwellings throughout the next five years.
Ongoing changes to residential zonings across North Shore suburbs, which have traditionally had low-density zonings in place, mean that these districts remain on the radar for both developers and residents, keeping population growth forecasts for these areas buoyant.
Developers have remained active in these suburbs, particularly showing strong interest in more palatable boutique development sites, which appeal to the still-thriving owner-occupier market.
There have been a number of recent off-the-plan sales on the Lower North Shore selling for more than $40,000 per square metre, in addition to the recent sale of a penthouse in Milsons Point for more than $61,000 per square metre.
Savills Australia is currently marketing two high-end residential development sites on the Lower North Shore.
The first site is located at 2 Greenwich Road, Greenwich, for circa 70 apartments (subject to council approval), with the majority of apartments from the third floor upward positioned to receive Sydney Harbour Bridge views.
The second site is located at 26 Ridge Street, North Sydney, a commercial building with the potential to be converted into 10 full or split-level apartments (subject to council approval) with a northerly aspect, and within 300 metres of the new Victoria Cross metro station.
A new injection of life into North Sydney & surrounding suburbs
North Sydney and its surrounding suburbs are set to become even more attractive to residents, investors and retailers, as the multi-billion-dollar construction investment into infrastructure spending on roads and transport hubs increases the precinct’s connectivity to the rest of the city.
We have already seen a wave of residential developments in the area inject life into the CBD’s forgotten sibling, with the Ward Street redevelopment plan set to revitalise the suburb’s 100,000sq m retail precinct.
In the five-year period to 2016, Savills research shows that the population in the Greenwich and North Sydney areas grew by 10 percent and 12 percent respectively, notably more than the growth rate for Greater Sydney.
Willoughby and North Sydney councils are positioned to maintain their strong population growth figures over the coming years, and the savvy developers looking to purchase in this market will continue to do well.
These areas have always attracted younger, more educated, professional workers with median single and family incomes significantly above Sydney’s and the nation’s averages, which has meant that the demand for property has far outstripped supply and will continue to do so in the years to come.