The 10 best suburbs to invest in Sydney in 2021

by Mike Wood02 Aug 2021

Investing in property in Sydney is an absolute no-brainer. Sure, real estate prices have gone up, but with interest rates remaining historically low and rental income set for growth, the time to strike is now.

Suburbs in Sydney can very massively: in the Eastern Suburbs, the median price is far higher, but so are the vacancy rates, a legacy of the COVID-induced lack of international students. In the West, the work from home trend and the need for more space has created the potential for rental yield to rise as more and more people move out.

With that in mind, we’ve surveyed the property market in search of some of the best Sydney suburbs to sink your cash in 2021.

Narrabeen 

When you’re looking for the combination of high rental income, guaranteed price growth and capital city beach opportunities, then you can’t look past Narrabeen as one of the best suburbs to invest in Sydney in 2021.

The median house price on the Northern Beaches is higher than other parts of Sydney, but in terms of investment in property, it’s as close to a sure fire winner as you’ll get: close to the beach, close to amenities, low crime rate and excellent for both families and professionals.

Collaroy 

If Narrabeen is one of the best suburbs to invest in Sydney, then it will come as no surprise that Collaroy is not far behind. It’s the next district down, and boasts its own beach, as well as easy access to Manly and central business districts at Chatswood, St Leonards and North Sydney as well as the CBD.

The Sydney housing market within reach of the CBD is very overheated, but Collaroy is just far enough away to avoid the problems seen in the Eastern Suburbs and Lower North Shore, yet remains excellent in terms of rental yield and capital growth. Mortgage brokers would do well to recommend it to their clients.

Bardwell Park 

The next big thing to happen to the Sydney property market is going to be the opening of the new Metro line, which makes a suburb like Bardwell Park ideal for investors. The potential for price growth is huge: it is currently not as expensive as other parts of the city, due to poor transport links to the CBD, but once that public transport link opens, it will become a far more viable option.

When picking suburbs to invest in, it helps to think long term: especially when you get your home loan at today’s low interest rate and then hold that value for ten years or more, slowly collecting rental yield. The vacancy rate in Bardwell Park is currently high, due to a lack of students, but that won’t last, making it the perfect location to invest in property in Sydney.

Fairlight 

Back to the Northern Beaches for our next tip, which is the suburb of Fairlight, just behind Manly beach. It offers easy CBD access via the ferry, but also amble space and thus rental potential. As far as the Sydney housing market goes, it is still far enough away to be affordable, but close enough that it is above the media house price for the capital city and likely to grow yet further: after all, the beach isn’t going anywhere.

Cronulla 

The far south of Sydney is long popular for the same reasons as the Northern Beaches: close to the water, but far enough away from the CBD to still have space. The median price is lower than the Eastern Suburbs and home loans, at least at current interest rates, are not out of control.

Once you have the place in your pocket, you’ll never lack for renters and the chances of equity growth over time are very strong. The Sydney housing market has few sure bets, but Cronulla might be one of them.

Petersham 

Young people are always the major source of renters, and for those looking for investment property in Sydney to take advantage of the strong rental demand, then the Inner West is always a good choice.

The price of property in Petersham is lower than in the big name suburbs of Newtown, Erskineville and Enmore, but the proximity to restaurants, bars and amenities still makes it an ideal place for a young person to live before starting a family, which in turn makes Petersham one of the best suburbs to invest in Sydney for those looking to tap into that market.

Bexley 

Combining the best of the Inner West with the proximity to the beach of the Eastern Suburbs, Bexley is the up and coming star of the Sydney property market. Real estate is cheaper here than in either of the above suburbs, and it brings the same sure fire success of long term rental yields that those districts have.

Bexley attracts a more ethnically diverse crowd, especially given proximity to Kogarah and Hurstville, while also maintaining easy access to the beach and capital city CBD sights.

Coogee 

Any list of the best suburbs to invest in Sydney is always going to include Coogee, and with good reason. Simply put, the power of the Pom is strong: there is always a supply of new migrants from the UK and Ireland who are willing to pay to live near the beach in the Eastern Suburbs, making the area from Bondi down to Coogee absolutely ideal.

It is an expensive place to get onto the Sydney property market for sure, but once you are there, you need not worry about rental yield. For many, property in Coogee is one that might require negative gearing and tax deductible growth, because getting onto the scene will likely leave you out of pocket. Don’t worry though, because over the long term, this is as safe as it gets.

Kingsford 

Kingsford is the Eastern Suburbs without being the Eastern Suburbs: boxed in by parkland on the West and much more expensive property market on the east, it can offer a point of difference from its neighbours.

The best suburbs to invest in Sydney are the ones that nobody else is looking at, the ones that make sure that you are ahead of the property curve: with much better known options nearby, Kingsford can be a point of difference, albeit one that will still require an amount of negative gearing to get you onto the market in the first place.

Kensington 

Kensington might be the perfect suburb to own an investment property in Sydney. It’s close to the beach, with easy access to Bondi and Coogee, but also a short Uber from the Inner West cultural attractions and the major capital city amenities of the CBD.

Real estate is expensive, above the median house price for Sydney in general, but with that comes a potential rental yield that is only going in one direction: once international students return and vacancy rates start to go down, you’ll be ideally positioned to take advantage.

This is a case of getting the home loan while interest rates are where they are at the moment, then sitting on the property for a couple of years and allowing the Sydney rental market to do the rest of the work for you.