Where is the best place to buy an investment property in Sydney?

How’s the investment property market looking in Sydney? Is now a good time to get involved? And if it is, where do you even start? What Sydney suburbs are going to make the best investment?

These are all questions we’re regularly asked at DiJones. And for good reason. Real estate investing in the Sydney property market can be lucrative. But it’s also a daunting prospect. Costs are high, meaning there’s always a large element of risk. But when you find the right property in a rising suburb, the opportunities for returns are exciting.

The good news? There are dozens of incredible suburbs in NSW that are ideal for investment. The NSW government’s infrastructure projects mean accessibility to the CBD is improving on all fronts. As such, many professionals, families, and students are now more willing to look further afield when searching for a home to rent.

This means 2024 has many rising stars that are set to become hotspots for investment. Suburbs like Casula, Minto, St Marys, and Ashfield, for instance, are now firmly on the radar. As always, affluent suburbs like Coogee and Maroubra remain excellent options.

We’ll talk more about the opportunities for buying property in Sydney later. But first, let’s take a brief look at the Sydney property market as a whole.

An overview of the Sydney property market

Sydney remains Australia’s most expensive city for property investors. But it’s not all doom and gloom. Promisingly, the city is recovering remarkably well from its January 2023 trough, during which property values fell 12.7% from January 2022.

The most welcome characteristic of Sydney’s property market has been its resilience in the face of external challenges. Economists forecasted that house prices would continue to fall throughout 2024. But against all the odds, property values have surged.

Sydney house prices currently sit at $1,170,152 on average as of July 2024, a 6.3% increase from the last year. This average combines houses (median price $1,466,475) and units (median price $855,468). Rental rates have also soared by 9% from 2023, exceeding the national average 8.5%.

The rising demand for housing

This is in part due to the increasing demand for housing. Population growth is triggering enormous price growth in Sydney’s suburbs. Investments in infrastructure, like the NSW government’s South East Light Rail and Western Harbour Tunnel projects, will also increase accessibility to many suburbs, making them more attractive to property buyers. This strong demand means vacancy rates are extremely low, sitting at just 1.7% as of June 2024.

To sum up, there’s a lot to be confident about. Interest rates are expected to continue falling, boosting borrowing capacity. This provides more opportunities for previously ‘priced-out’ investors to get involved. And once investors gain a foothold, average annual rental yield sits at a comfortable 3.1%.

Still, it’s important to say that Sydney’s housing market isn’t one market at all, but several. Median prices can only go so far. Every suburb is different—some more enticing than others.

So, with that in mind, we’ve picked our top ten suburbs for property investment in Sydney for 2024. But first, let’s discuss how we chose our candidates.

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10 Best suburbs in Sydney to invest in

We selected these suburbs based on several metrics, such as vacancy rates, median house prices, and rental yields.

We also only chose areas with a total population over 5000 and preferred areas that were walkable, with lots of infrastructure to support communities. Lastly, all of our picks have high rental demand and strong capital growth potential.

With our criteria out of the way, let’s take a look at the top 10 suburbs for investment in 2024. As ever, these are in no particular order.

1. Coogee

Coogee is ideally positioned for growth in 2024. This affluent eastern suburb is soon to benefit from the NSW government’s $2.2 billion South-East Light Rail investment. This will make Coogee’s ideal coastal position—just 8km from the CBD—even more enticing for renters.

Median property prices in Coogee are steep, sitting at around $3.7 million. But for those with the borrowing power, this affluent suburb’s established community, accessibility, beachside lifestyle and local amenities make it an enticing opportunity for investment.

2. Ashfield

Ashfield’s parks, historic sites, and walkability make it a very pleasant place to live. The inner-west suburb’s median property price is currently $2,145,000, but apartments—which are currently in high-demand in the region—only cost around $790,000. This makes them an attractive, affordable choice for investment.

3. Kensington

Kensington is another suburb poised for growth due to the government’s South East Light Rail project. This makes it attractive for working professionals, and as it is the home of UNSW, it is in high demand for students and university staff.

Notably, Kensington was also the highest-performing Sydney suburb for rent growth in 2023. As the suburb is constantly developing, it is an excellent choice for long-term investment.

4. Minto

Minto offers one of the most affordable investments in Sydney. Median house prices sit around $900,000 for housing and a cool $580,000 for units. The area has exceptional demand due to the large number of local amenities. Houses sell quickly, and Minto boasts one of the lowest vacancy rates of any suburb at just 0.78%.

5. Padstow

Nestled in Canterbury-Bankstown, 21 km from the CBD, Padstow offers excellent amenities and a thriving, diverse community. The M5 Motorway and commuter rail provide easy access to the city centre.

Padstow also benefits from outstanding green spaces and a TAFE campus. Buyer demand has soared in this suburb, and with a median property price of $1,380,500, it’s an exciting prospect for investment returns.

6. Parramatta

Parammata’s transformation into a vibrant hub for businesses and residents has been nothing short of extraordinary. Key to this change has been the government’s consistent investment in infrastructure projects to support the suburb. Median house prices sit at just $1,500,000, while units cost around $630,000.

As with Padstow, Parramatta sits a little further afield (24 km) from the CBD. However, as transport links continue to improve, this residential suburb is set to continue surging in demand.

7. St Marys

St Mary's has been experiencing renewed demand in recent months. Both houses and units sell rapidly—usually within three weeks—meaning vacancy rates are low.

At only $882,000 for houses and $609,000 for units on average, the suburb’s affordability, coupled with its infrastructure and accessibility, make it an attractive prospect, both for buyers and property investors.

8. Maroubra

Like Coogee, Maroubra is another beachside suburb that draws considerable attention due to its coastal appeal and lively community atmosphere. Transport links are excellent, and life in the suburb is pleasant, meaning rental demand is consistently high.

This also means property prices are steep, with the median value sitting at around $3M. But for those who can afford it, Maroubra is an enticing and comparably safe investment opportunity.

9. Marrickville

Marrickville offers an exceptional combination of amenities and accessibility. Its cafes and restaurants are consistently ranked among Sydney’s best, and its outstanding schools make it popular with families.

Public transport is also first-class, meaning the suburb also appeals to working professionals. As with Maroubra, this is a well-established investment opportunity, and growth potential looks promising.

10. Casula

Casula is yet another rising star in the Sydney real estate market. Positioned 35 km outside the CBD, this suburb benefits from commuter train links and proximity to local amenities. It is also one of the more affordable options on our list, with an average unit price of $758,000. Demand is high, meaning vacancy rates are less than 1%.

Let’s look at the numbers

Here’s a table showing all the facts and figures you need to make informed decisions. All information in this table was drawn from realestate.com.au.