National

The Sydney suburbs where buyers are at biggest risk of overpaying for property

Buyers in Sydney’s most hotly-contested suburbs are at extreme risk of overpaying for property as fierce competition drives price growth to record highs.

Pete Wargent, co-founder of property buyer’s agents BuyersBuyers, says even in the most prime property markets in the country it’s possible for buyers to overcommit to get their foot on the ladder.

He highlighted nine areas of Sydney – largely around the Northern Beaches, Eastern Suburbs and Inner west – where buyers carry the greatest risk of capital losses.

“History leaves clues. Firstly, as Napoleon once observed, the moment of greatest danger occurs at the moment of victory,” Mr Wargent said.

“Complacency occurs when things appear to be going well and can lead to a lack of discipline. People tend to lose sight of the bigger picture.

“A property boom cannot dispel the risk of capital losses, as we have seen at the peak of previous market cycles.”

A full list of the biggest-booming locations can be found below.

Mr Wargent is urging buyers to “keep a cool head”, reminding those that even in today’s booming market up to 10 per cent of properties are sold at a loss.

“Buyers need to remember that the tide will go out eventually. So keep a cool head, research thoroughly, and pay the right price. If you can’t afford to buy a AAA property, then try to focus on location while ticking as many boxes as possible within your designated budget,” Mr Wargent said.

“You can change many things about a real estate investment, but the one thing you can never change is the location, which will always remain fixed in place.”

Doron Peleg, founder of property market research firm RiskWise Property Research, said the days of buying any property and making a profit are coming to an end.

“Even if you were too excited and overpaid 10 per cent a year ago in Sydney, you still made a profit of more than 10 per cent, as the market has been delivering more than 20 per cent price growth. Due to a lack of stock on the market, there were buyers interested in almost every property, regardless of its quality,” Mr Peleg explains.

“Now, with decelerated price growth in 2022, and potentially a stagnant market – or even small price reductions – in 2023, the consequences of overbidding will be more significant.

“Naturally, properties with sub-optimal qualities will experience lower demand as the market cycle moves on and will be more sensitive to price reductions in such conditions.”

Mr Wargent said in Sydney particularly there is a danger that buyers are committing their cash at the peak rate of property growth – meaning they’ll have to hold onto an asset for longer to see a return.

“Many popular markets in prime locations in Sydney have experienced a huge boom in prices over the past 18 months, and buyers need to recognise that these conditions can’t be sustained once price growth decelerates and there are ‘normal’ market conditions,” Mr Wargent said.

“Regulatory moves to limit borrowing capacity will have an impact on house prices in Sydney.”

Top Nine Property Boom Locations in 2021*

City:	Suburb:	Property Type:	Median Price:	YoY Growth:
Sydney Advertisement	North Bondi	House	$4,077,890	+ 45 per cent
Sydney	Dover Heights	House	$4,941,549	+ 44.6 per cent
Sydney Advertisement	South Maroubra	House	$2,812,271	+ 49.6 per cent
Sydney	Strathfield South	House	$1,958,495	+ 55.7 per cent
Sydney Advertisement	Mosman	House	$5,319,283	+ 41.8 per cent
Sydney	Neutral Bay/Kirribilli	House	$3,539,335	+ 52.2 per cent
Sydney Advertisement	Balgowlah	House	$3,828,329	+ 51.6 per cent
Sydney	Manly	House	$4,061,235	+ 51.7 per cent
Sydney Advertisement	Avalon	House	$3,291,012	+ 61.0 per cent