What the Growth of Western Sydney Teaches Us About Property

Throughout 2018, Australia’s population hit a milestone of 25 million, years ahead of the expectations of the Australian Bureau of Statistics. Strong levels of overseas migration and a robust health system saw our nations population grow faster than the majority of the OECD. Since 2000, our countries population has added the equivalent to the whole population of Queensland  and this growth is still apparent today, with the ABS estimating Australia adds a new residents every 83 seconds.

Possibly the biggest success story over this period in terms of property, was the growth of the Western Sydney market. A region that was previously avoided and undesired, has now grown to house 1 in 10 Australians (2.5 million residents). Strong levels of development has seen the region flourish, with the emergence of the Parramatta CBD and a number of landmarks. Pictures below depict the growth specific region since just 2009.

Parramatta Stadium (2009-2019)

Penrith (2009-2019)

The most impressive performance however, has been the rise in house prices. The average property value since just 2011 has risen significantly in reaction to strong housing demand. Such housing markets as Blacktown rose by 93%, Bankstown by 86% and Parramatta 147%, in performances that greatly benefitted Blue Wealth clients. But in a time where Western Sydney held such an undesirable status, what lead us to approve the market?

Population and demographics

Reactive to strong levels of overseas migration, Greater Sydney was pushing tens of thousands of new residents west in search of greener pastures and cheaper housing. Population projections at the time forecasts and town planning instruments indicated massive increases in the population over the coming decade.

Infrastructure and Government Spending

Major investment into the Olympic Park precinct, combined with a $1.4 Billion Civic Place project provided the region with one of the largest government backed initiative in the country. The provided western Sydney with amenity that that market had never seen, ultimately

Economics and employment Growth

Parramatta central business district, a hub that had been previously underutilised, had major development plans to become a second Sydney employment hub. The city centre has now grown to support the employment of over 180,000 jobs and produce a yearly Gross Regional Product of $26.7 Billion.

Supply and Demand

These factors ultimately drove the widespread growth of a population, at a rate that was unsustainable for the western Sydney housing market. The result of which, was strong buoyancy in median values throughout one of the strongest property cycles seen in the Greater West.

So, what does Western Sydney teach us about investing in property?

It is important to take an objective perspective to understand what you are buying into. Your purchase is based around presence of fundamental growth drivers and what they provide to you as an investor. Investing should be based on researched decisions, not by how you perceive a market as a buyer. Because if you judge a book by its cover, you might miss a gem like Western Sydney.

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