Good long-term outlook for Parramatta property market
Aug 23, 2018
Parramatta has enjoyed some exceptional changes and capital growth and, despite recent downturns in the Sydney property market, the medium to long-term outlook is optimistic for houses in the area.
Analysis by RiskWise Property Research shows while in the short-term there is definitely a risk involved with property, largely due to lending restrictions, in the long-term solid capital growth is expected.
RiskWise CEO Doron Peleg said while in the past Parramatta had been considered a ‘less desirable area’ for investors and a ‘compromised decision’, with the only benefits being affordable housing and access to the CBD at only 23km away, it had now become a ‘suburb of choice’ thanks to its changing face as a ‘sub-city of Sydney’.
Parramatta has delivered very strong capital growth of 101 per cent for houses and 67.0 per cent for units in the past five years.
It comes at a time when the Greater Sydney Commission has been established to create an ambitious three-city plan over the next 20 years. The traditional Sydney CBD will become the Eastern Harbour City, Greater Parramatta the Central River City and the Western Parkland City will comprise Camden, Campbelltown, Liverpool and Penrith.
The aim is to address a rising population, unaffordable housing and increasingly congestion. With Sydney's population expected to double to eight million by 2056, the idea is for residents to live within a half-an-hour commute to their closest CBD.
Parramatta, Australia’s oldest inland city and the geographic centre of Greater Sydney, is already largely seen as a second CBD and employment hub of Sydney and as an area that ‘stands by itself’.
According to the Greater Sydney Commission, “unprecedented public and private investment is contributing to new transport and other infrastructure leading to a major transformation”.
The area comprises Parramatta CBD, North Parramatta and Westmead and Parramatta Park. It takes in the Olympic Peninsula Economic Corridor including “the Westmead health and education precinct; advanced technology and urban service sectors in Camellia, Rydalmere, Silverwater and Auburn; and the Sydney Olympic Park lifestyle precinct. The corridor will be supported by the Parramatta Light Rail. The Sydney Metro West rail link will deliver faster and more efficient transport from the Harbour CBD to Greater Parramatta,” says the Greater Sydney Commission.
“In the past residents had to commute to the Sydney CBD to work but things have changed, and the entire area has been developed with additional infrastructure projects which means more employment opportunities and a swelling population,” Mr Peleg said.
“Because of this capital growth for houses is projected to be strong in the medium and long term, particularly due to strong projected demand mainly by owner-occupiers.
“However, units in the short to medium term do carry a higher degree of risk due to the current oversupply. There are currently of 1849 in the pipeline for Parramatta, a percentage of 13.6 per cent and for the ABS Statistical Area Level 4 (SA4) 13,308 at 16 per cent which is considered very high. In addition, the majority of off-the-plan units are sold to property investors who are subject to lending restrictions and this has a direct impact on new dwellings.
“Recently, lending restrictions have impacted on prices, particularly for off-the-plan units, and we have seen auction clearance rates for the SA4 Parramatta fall from 66.0 per cent to 57.1 per cent in the past 12 months.”
Mr Peleg said with predictions the population of the Central River City could increase from 1.3 million to 1.7 million people over the next 20 years, this only reinforced the potential for solid capital growth for houses in the long term.