Spotlight on Leichhardt as Vacancy Rate Remains Tight

12 September 2017

Located in Sydney’s Inner West, Leichhardt offers the convenience of being close to the CBD with great transport links, good local schools and plenty of parks and amenities. The area boasts a tight residential vacancy rate of 1.6 percent compared to 2.0 percent across Greater Sydney, driven by the high demand and lack of new supply.

Historically, there has been little development activity across the suburb. Over the past 15 years, the number of residential dwellings in Leichhardt has increased by just four percent. However, the lack of development activity is changing with the recent rezoning and the ‘Parramatta Road Corridor Urban Transformation Strategy’. The number of residential building approvals have increased by 120 percent over the two years to the 2015-16 financial year. Just five percent of these approvals are detached houses, the vast majority are townhouses and low rise apartment blocks.

The neighbourhood has a strong sense of community which stems from its rich Italian heritage. Following the Second World War, Leichhardt became a centre for the Italian community in Sydney, reflected by the many Italian owned businesses in the area. Although it has become less distinctively Italian with the increasing gentrification of the suburb and movement of families to suburbs with larger blocks of land, its Italian character is still tangible.

According to Sophie Chick, Head of Residential Research at Savills and author of the Spotlight Residential Property Report on Leichhardt, the popular suburb has seen a 115 percent increase in residential property prices over the past decade.

“The median value of a residential property in Leichhardt in July 2017 was $1,567,000 and $986,000 for a house and apartment respectively. Houses are a similar price to the neighbouring suburbs of Petersham and Lewisham to the south, around 10 percent cheaper than Stanmore, Annandale and Lilyfield and one third cheaper than Haberfield to the west. This is partly due to the larger blocks of land available in the surrounding suburbs. By contrast, apartments in Leichhardt are a similar price to Lilyfield and more expensive than all other neighbouring suburbs.

“Leichhardt offers a mixture of property types and attracts a wide range of households. Families with children account for 39 percent of households, slightly below the average across Greater Sydney of 47 percent. By contrast, there is a slightly higher proportion of couples without children and lone persons in the suburb compared to the city average accounting for 47 percent of households”.

Employment opportunities and proximity to employment hubs are a key reason people are drawn to live an area. Leichhardt’s connections to the Sydney CBD means that a high proportion of residents in the suburb work in high value industries such as the Professional, Scientific and Tech sector and the Information Media and Telecommunications sector.

Ms Chick went on to say that 50,000 new jobs are forecast along Parramatta Road over the next 30 years, which will only see Leichhardt’s popularity rise.

Parramatta Road has been one of Sydney’s major transport corridors since it opened in 1811, connecting the Sydney and Parramatta CBDs. The corridor has grown considerably, which has led to significant traffic congestion. When completed, the WestConnex motorway will help ease the traffic pressures by diverting an estimated 50,000 cars a day from Parramatta Road, making room for new homes and jobs.

In November 2016, the government released its new 30-year ‘Parramatta Road Corridor Urban Transformation Strategy’. The initiative is expected to drive new development to accommodate a diverse mix of commercial uses, employment zones and homes for 430,000 people. There is a target of 27,000 new residential dwellings and 50,000 new jobs along the corridor between Homebush and Camperdown.

Leichhardt is one of the eight strategic growth centres identified within the corridor, which will become the focus of future investment.

 

Looking Forward

Ms Chick said it is important to assess the outlook for Leichhardt in the context of the Sydney property market.

“Property prices in Sydney have increased substantially over the past 10 years in common with many other cities around the world. The market has benefited from strong economic conditions, low interest rates and an imbalance between demand and supply. More recently, while Sydney’s property market continues to see some of the strongest growth in Australia, the rate of growth has slowed.

“The affordability of residential property is one of the biggest challenges facing the city and will limit the demand from both first home buyers and home movers. Additionally, following the regulatory measures introduced to temper lending to investors, it is widely believed that the proportion of bank lending to investors could reduce. Demand from foreign investors is also likely to be tempered following the introduction of additional stamp duty charges”.

Overall, it is expected that the rate of price growth across Sydney will slow, with prices remaining on a ‘high plateau’ perhaps for some time. However, as Sydney’s population continues to increase, interest rates are low and infrastructure projects complete the long-term prospect for the residential markets remain sound.

In Leichhardt, the attributes that attract buyers, including the proximity the Sydney CBD, good transport links and high quality amenities, will continue to appeal, regardless of market conditions.

The revitalisation of Parramatta Road is anticipated to provide a wider range of housing options as well as increased amenities, new transport choices and more local jobs. Ms Chick said this is likely to attract a broad demographic of buyers to the area including first home buyers, families, downsizers and investors.

 
 

Key Contacts

Sophie Chick

Sophie Chick

Head of Research
Residential

Savills Sydney

+61 (0) 2 8215 6097

 

Jessica Freeman

Jessica Freeman

Director - PR NSW
Corporate Services

Savills Sydney

+61 (0) 2 8913 4826