Why Sydney’s waterfront homes command a premium

Whenever I look to buy a property I always follow a few basic rules.


Firstly, the property needs to be in a blue chip area. I want to make sure that the area itself is in demand and that the people who live there will always have the income levels to afford it. That ensures more growth in the future.


Secondly, the property needs to appeal to owner-occupiers. It’s ultimately owner-occupiers who drive property markets. We’ve seen that very clearly over the past few years, with people wanting to live in certain locations and those locations skyrocketing in value.


Finally, there needs to be a certain degree of scarcity about the property. There’s no point buying into a good area if you’re looking to purchase an apartment in a huge building of 300 units. There’s no scarcity there and you’re at the mercy of the other owners when it comes to price growth.


When you get these three factors in a property, you can be sure that you are going to see them attracting a significant premium.


This has been highlighted clearly in new data from Knight Frank on waterfront properties.

According to their research, waterfront properties in Sydney attract the largest premium in the world compared to comparable properties without the same access to water. In fact, you can expect to pay a massive 121% more for a waterfront home compared to the property across the road.


Waterfront premiums were also incredibly high on the Gold coast, Perth, Melbourne and Brisbane.

While it’s fair to say that most people would like to live in a waterfront home, when you look at them in the context of my three factors listed above, it’s no surprise that this is a good formula for capital growth.


For the most part, waterfront properties are normally in blue chip areas. Even less desirable areas in the cities or regional locations normally have those small pockets of waterfront homes that are typically priced a lot higher than everywhere else.


By and large, it’s also owner-occupiers who are buying these types of properties. For many waterfront homes are a status symbol and something to aspire to. So when a highly desirable waterfront property comes onto the market you can be sure there will always be an interested buyer.


And lastly, waterfront homes are almost the definition of scarcity. There are only ever going to be so many homes that can have water views. While new buildings do pop up, demand will always outstrip supply.


It’s these reasons why waterfront homes were seeing price growth as high as 60 per cent per annum during the most recent upswing and why they will likely continue to see strong growth during the next growth phase.


If you can find a property in the likes of the Eastern Suburbs or Northern Beaches with water views or that are situated with very close access to the water, then you can be sure you’ve found something that is scarce that will attract a premium and should also see consistently strong capital growth.

If you are interested in the above, feel free to reach out to a Henderson buyers agent in Sydney  today for more information.


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