HTW: Western Sydney granny flat boom to continue

According to the latest Herron Todd White (HTW) residential report, one market to keep your eye on in 2020 is the new apartment market in the Parramatta local government area. A significant amount of new units are expected to be completed in the first half of 2020 and this will continue with up to 21,100 dwellings forecast to be constructed by 2023, most of these being residential units.

“What we do know is that there is a large difference between forecast numbers and actual construction numbers as developers may hold off on construction to ride out lulls in the market, so we will wait and see how things unfold,” the valuation firm stated. 

Western Sydney has seen a boom in granny flat construction over the past decade, with property owners taking advantage of larger allotments to build granny flats to add value and create a second income. If you add in the fact that interest rates are at historic lows and there may be the potential for 5+% returns in some areas, HTW believes that granny flat construction will be a popular choice for investors of all types throughout the year.

“The high growth seen in the last quarter of 2019 is unlikely to continue throughout 2020. Affordability will be a key issue. As household incomes are still under significant pressure, buyers will need to look to the outer suburbs to find an affordable property. This will benefit the western suburbs of Sydney where there is still property at an affordable price point, relatively speaking,” the valuation firm stated. 

Investors will be prevalent throughout 2020 with yield a big driver.

Prudent purchasers should keep an eye out for any infrastructure being built and get in before prices shift again.

Written: 1 April 2020, Updated: 24 March 2020

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