Finder’s Property Investment Index Sydney

Australians love property, but for many, figuring out where to invest is the hardest part. Finder's Property Investment Index uses a range of data inputs to predict price growth in each suburb across Australia's major cities. A Property Investment Index for Melbourne is also available.

What is the Property Investment Index?

The Property Investment Index is a model that ranks suburbs based on their investment potential. Suburbs are scored out of 100, with 100 indicating very high predicted price growth and 0 indicating very low or negative predicted price growth.

The final score is calculated based on 3 factors:

• Market demand (maximum 50 points): This is based on sales turnover, average days on market, vacancy rates, building approvals and distance to the CBD.
• Population (maximum 40 points): This is based on population, population growth, income, income growth and unemployment rates.
• Property (maximum 25 points): This is based on historical property price growth and current property prices.

An additional 15 points are given to suburbs that have had at least 1 property sale over the past 12 months. The number of points for each suburb is capped at 100.

The index is intended to be an indicator of relative price growth, rather than of property prices themselves. A high score does not necessarily mean that a suburb will have the highest house prices but that we can expect strong growth in that area.

Houses

Top scoring suburbs by price point

Units

Top scoring suburbs by price point

Search the Property Investment Index by suburb

How the Index works

Finder's Property Investment Index uses a range of data inputs to predict price growth in each suburb across Australia's major cities. These data inputs are weighted to produce a score out of 100, with 100 indicating very high predicted price growth and 0 indicating very low or negative predicted price growth.

Apart from the weighted inputs listed below, an additional 15 points are given to suburbs that have had at least 1 property sale over the past 12 months.

Investor activity is climbing in New South Wales

Prior to the pandemic, investor activity in New South Wales had been falling since 2017. When COVID-19 hit, investor home loans continued to fall before recovering to reach new records. In November 2021, the value of new investor home loans reached a historical high of $4.9 billion, an increase of 83% from the previous year.

The data also shows investors are beginning to take on more of the market from owner-occupiers. In January 2021, investor loans made up 24% of all home loans, but that figure has now grown to 37%.

"Interest rates are rising and it's already hitting borrowers quite hard," says Richard Whitten, Finder home loans expert.

"This is true for investors too. As borrowing gets more expensive, property prices are almost certainly going to fall," he adds.

"This seems likely to hit Sydney more than other cities simply because no other city has seen such high prices for so long. There's much more room for prices to fall in Sydney. It's also worth noting that more expensive, higher-value properties may be more affected for the same reason."

"But if interest rates remain high and the Sydney market cools down, this will probably benefit some investors. An investor with steady income and existing property wealth will be well-placed to make advantageous investment choices."

"Less cautious, more over-extended investors may find themselves struggling to pay off expensive loans when the value of their investments is falling," Whitten says.

Property sentiment in Sydney

Half of Sydney residents (50%) expect property prices in their local area to increase in the next 12 months, according to Finder's Consumer Sentiment Tracker. This includes 16% who think price growth will be significant. However, Sydneysiders are the most likely to think prices in their area will decrease over the coming year (22%).

• Methodology

  Finder's Property Investment Index uses a range of data inputs to predict price growth in each suburb across Australia's major cities. Each suburb is given a score out of 100, with 100 indicating very high predicted price growth and 0 indicating very low or negative predicted price growth.

  Our model used 12 data inputs, including property price growth, unemployment rates and income growth (see table above for details). Each of the inputs is scored to distribute the data between 0 and 100. For instance, a suburb with an unemployment rate of 0% would receive a score of 100 for the unemployment metric. These 12 sub-scores are then weighted to calculate an overall score between 0 and 100. An additional 15 points are awarded to suburbs that have had at least 1 property sale over the past 12 months.

  Houses and units are analysed separately so that each suburb is assigned 1 index score for houses and 1 for units. There is less property data available on units, particularly in suburbs where houses make up the majority of sales. This is why some suburbs are missing data on units.

  In cases where a data point (e.g. price growth) is not available for either units or houses within a suburb, the available data is used for both property types. For example, if sales turnover for units is unavailable in a suburb, the sales turnover figure for houses is assumed. If the data point is missing from both units and houses, the suburb is given a score representing the 17th percentile of all properties (i.e. one-third of the average).

  Note that the suburb-specific CoreLogic data we use lags by 3 months. This means that data released in May reflects the property market in February.

• Assumptions

  • The index uses historical data to predict future changes. We assume past population, income and property price growth are indicative of future growth.
  • We analyse data by suburb, but in some instances, data is not available at the suburb level. In this case, we use the equivalent data at the postcode level instead.
  • Data used on building approvals is at the LGA level rather than the suburb level.

• Disclaimer

  Finder's Property Investment Index analyses the latest available data and is provided as a guide only. It should not be relied on as financial advice or to make financial decisions. This data and information are provided for information purposes only. You should seek personal advice from your financial planner or property investment advisor before making purchase decisions.