The Best Performing Eastern Suburbs in Sydney For Investors

Mark Taylor , Principal/Licensee in Charge | 8 May 2019

In an unstable property market, Sydney’s Eastern Suburbs are still offering excellent opportunities for investors. Here’s where to buy for the best rent increases, vacancy rates, capital growth and rental yields.

Sydney’s rental market might have been a bit unstable over the past nine months or so, but there are plenty of Eastern Suburbs still offering great opportunities for investors. No matter your investment strategy, there’s a suburb to suit you. Here are the best-performing Eastern Suburbs for property investment.

Best Eastern Suburbs For Rent Increases

While rental prices have been falling across the city, recent Domain data shows that some of the Eastern Suburbs are actually experiencing year-on-year (YOY) increases. According to the Domain Rental Report - March Quarter 2019, three suburbs in the East are among Sydney’s best for rental growth for houses and apartments.

Investors seeking an apartment with increasing rent should look to Dover Heights, where the YOY growth of 7.10% brings the median weekly rent up to $750. Buyers who’d prefer a house (and have a big budget) will benefit from property in Bellevue Hill, which had the second-highest rent increase for houses in Sydney at 13.4% YOY for a median rent of $2,295. Bronte comes in at number four for houses, with a 10.7% YOY increase bringing the median weekly rent to $1,550.

Best Eastern Suburbs For Vacancy Rates

2018 market shifts brought the highest vacancy rates Sydney had seen in some time, with SQM Research reporting the overall rate was at 2.6% in March 2019 after peaking at 3.5% in January. Whilst this drop could be an indicator of an improving market for landlords, it’s just as likely that the higher vacancy rates will stick around for a little while longer.

Even within the higher city-wide vacancy rate, some parts of the Eastern Suburbs have excellent rates that would please any investor.

These are the suburbs with a vacancy rate under 2%, according to April data from realestateinvestar.com.au:

South Coogee: 0.98%
Watson’s Bay: 1.48%
Dover Heights: 1.49%
Clovelly: 1.63%
Darling Point: 1.86%
Vaucluse: 1.9%

Best Rental Yield In The Eastern Suburbs

Investors focusing more on rental yield will find plenty of strong options, whether they’re looking for something on the water or more inland. According to SQM Research, Sydney’s overall rental yield was approximately 2.9% for houses in March 2019 and around 3.8% for apartments and there are suburbs in the east higher or very close to those averages. Here’s where to get the best yield:

Houses:

South Coogee: 2.92%
Bondi Junction and Waverley: 2.73%

Apartments:

Waverley: 4.07%
Dover Heights: 3.95%

Best Capital Growth Over Two Years In The Eastern Suburbs

Data from realestateinvestar.com.au shows that there’s been high growth in the past two years, with highly sought-after suburbs attracting buyers in any market.

Unsurprisingly, the highest growth has been in beachside favourites like Bondi and Clovelly, harbourside gems like Rose Bay and Darling Point, and infrastructure hotspots like Kensington.

For houses, it’s of course often the places with low supply that have seen skyrocketing prices in line with demand – just 4.5% of Bondi Beach dwellings are standalone houses according to 2016 Census data, while Rose Bay and Kensington have 22.1% and 19.2% respectively. For apartments, this seems to play less of a role, with the lifestyle opportunities bringing in buyers instead.

Here’s where growth has been highest in the past 2 years:

Houses: