The median price is in many ways a limited figure. It is the middle value when sale prices are ordered from lowest to highest, and the underlying sales can include properties on streets you would never dream of purchasing, of a type you would never consider, and transactions from earlier in the reporting period. To base a million dollar plus purchase in Sydney or any other global city on the most oft cited statistic in real estate is to operate at a level of risk you don’t need to be at.
Why the suburb median is the wrong place to start
A suburb median rolls together sales from every street, every block size, and every dwelling type into a single figure. One side of a suburb may be within walking distance of two train stations and a busy arterial, while the other backs on to bushland two streets over and be worth hundreds of thousands less. Throw in a mixture of fibro weatherboard cottages and architect’s rebuilds and it becomes apparent that the median price for a given postcode provides little information apart from noise.
The best place to start researching value is to forget the postcode and identify the market segment within which your desired property falls. This may be a matter of drawing a rectangle on a map, within which your target dwelling falls, bounded by the same natural or manmade constraints that might cause prices to diverge within a larger postcode. Once this frame of reference has been established, everything else becomes a reference point within it, with comparables outside the frame serving only as a guide.
Building a comparable-sales file
Research and collate every sale that has settled in your frame of reference. Use the last three months’ data as a guide, as this should provide at least adequate colour on the market’s directional bias and you will be dealing in figures relevant to the buyer’s budget. CoreLogic and Domain should have this data on file, and it is advisable to use both as a cross-check, as either may lag the market slightly.
Adjust each comparable to reflect differences in land size, aspect, street presence, internal condition, and level of renovation if applicable. The number of bedrooms is commonly used as one factor when comparing property values, but two three-bedroom houses can differ materially in value depending on their street, internal condition and renovation potential. Note these adjustments down on a spreadsheet, and you will find that you can justify almost any valuation given sufficient tinkering with numbers on this spreadsheet.
The spreadsheet is also a useful aide memoir as you go through the due diligence process with both agent and bank, as well as a psychological aid if the magic of auction time finds you entertaining the prospect of a big house-warming next weekend.
Reading supply and demand at a suburb level
The most useful numbers to have when it comes to auction time include clearance rates and days on the market for your local patch. Both need to be interpreted alongside the number and type of properties being sold. A clearance rate above 70% may indicate strong buyer competition, but it does not automatically make every part of a suburb a seller’s market. A lower rate may suggest more room to negotiate, including through pre-auction offers, though individual properties can still attract competing buyers.
Days on the market acts as a barometer for general desire for a property. Three to four weeks is a long time to market in an inner-suburb pocket for a property that will take a similar amount of time to secure an offer on. If you are in a hot suburb, a six week campaign in a less desirable pocket indicates that there is reason for caution.
The document stack that you cannot avoid
There is no such thing as a cooling off period for Sydney auctions. You are entirely responsible for the results of any due diligence you choose not to perform, which is why the pre-auction document stack is not a suggestion, but a bare minimum you must complete before auction day. The most important document in this stack is the Section 10.7 planning certificate, which makes clear any heritage overlay, flooding or bushfire risk, road widening or other works proposal, and zoning for the land in question. Remember that two houses on the same street can have materially different overlays depending on their position on that street, so the same applies to the house you intend to buy.
The next set of documents to review are the contract disclosure annexures. Read them in detail before auction day, and if possible with the aid of a solicitor or conveyancer, as vendor disclosure obligations in New South Wales are designed to ensure that buyers can check off any concerns before exchange of contracts. That process will not help you if you leave it until the morning of the auction.
Matching zoning and overlays to your projections
If you are buying a property with the intention of renovating or redeveloping at some point in the future, the assumptions you are making about that renovation or redevelopment must be tempered by reality, specifically the overlay and council planning zone that apply to the property in question. Heritage overlays are common across Sydney and unless you are buying a comparatively recent construction, chances are excellent that at least some element of the property’s renovation or redevelopment will require council approval. The same goes for street trees, fencing, and reciprocal rights with immediate neighbours, which may apply to your property even if not to the house immediately next door.
Planning overlays can restrict what you are allowed to renovate or redevelop, affecting both the property’s practical potential and its long-term value. Properties in flood- or bushfire-prone areas, or streets with heritage controls, may face additional approval requirements. A poorly planned council height overlay may even see you building a house beneath the height of the nearest legal house. Check all overlays and planning zone restrictions with a Section 10.7 planning certificate before assuming that any renovation or redevelopment is possible at all.
Infrastructure: funded versus proposed
Infrastructure projects have a powerful appeal, but the truth is that completed or funded projects will see capitalised values increase in their vicinity to reflect the works’ completion. If a significant development has been announced and is partially or fully funded, the market will take this into account when determining prices as the project nears completion.
By the same token, a proposed project that faces years of funding and political hurdles ahead will see little adjustment to values along its projected route, with the possible exception of speculative increases due to the amenity the project is expected to bring. In either case, it is best to research projects’ funding and completion statuses directly, rather than rely on assurances from real estate agents about the distinction between proposed and funded projects.
Who’s actually going to be in the room
At a demographic level, the characteristics of an SA1 (statistical area) can provide useful insight into a pocket’s likely buyer base, with particular regard to age, family composition, income, and the balance between renters and home owners. A buyer using an independent Sydney buyers agent such as PK Property can request this information in summary form, but it can also be found through a public records search.
A rising proportion of owner-occupiers and increasing income levels signal a strengthening market, while a large renter proportion and stagnant income figures signal one that favours investors over first home buyers. Family profiles can also be important, with many buyers choosing to live within a certain area on the strength of its schools. A property just outside a sought-after school’s catchment area may attract different buyer demand from a comparable one inside it, although condition, location and other factors also influence price.
Getting out of the car
While there is value in the kinds of research described above, it cannot replace the value of getting out and seeing the street for yourself. It is easy for purchasers to overlook this step, as it is time consuming and inconvenient, but it is one that will reward you many times over.
Visit the street at different times of the week and note traffic patterns, pressure on parking, and noise from arterial roads or trains. Look at the condition of neighbouring homes, which will indicate whether the area is generally desirable and has a strong sense of community, or one where absentee landlords and disrepair are commonplace. This kind of information will not appear in any CoreLogic report, but it will affect both your enjoyment of the property and its resale value.
Where market price and bank valuation meet
It is a common experience for first home buyers to find themselves unable to get finance after the excitement of the auction, especially if they have fallen for a property at the higher end of their budget range. Lenders operate according to risk management principles, and in Sydney’s highly competitive pocket markets, this frequently means a bank’s valuation of a property will be lower than the market price. According to Domain’s House Price Report for the December quarter of 2024, Sydney’s median house price was well over $1.6 million; a 2 or 3% discrepancy either way represents tens of thousands of dollars.
This is why your research should be bifurcated between price discovery – what the market will bear for the property you have identified – and the expectations of the bank lending you the money to buy it. If these two figures are substantially different, it is important to understand why before auction day, rather than after the hammer has come down and you are unable to get finance.
The honest time cost
Completing the steps outlined above will involve dozens of hours of research per shortlisted suburb, with comparable-sales research, document reviews, overlay checks, and fieldwork all contributing. Given the time constraints of working professionals and families, this may be an unrealistic commitment for more than one property, let alone enough to allow meaningful comparisons between suburbs.
A prospective buyer who does not have the time to complete this research can shortcut the process by passing responsibility to a Sydney buyers agent experienced in due diligence and evidence-based suburb research. Not only do such agents save time, but they also avoid the kinds of research oversights that can only be identified once a buyer is standing at the counter, about to pay tens or hundreds of thousands of dollars.
A suburb research task list is not a weekend job, and the realisation that it is not encourages buyers to think strategically about their purchase, rather than rely on gut instinct and hope that the number they settled on happens to be correct.