Despite news of softening demand and tightening of lending rules, Sydney remains a good investment. Whether you plan to reside in your property or manage it as a long-term investment, Sydney’s real estate market still offers plenty of upside. The key is to find out where in Sydney is it best to invest in real estate.

According to FlintProperty, Real Estate in Sydney has a median value of AUS $780,900; easily the most expensive in Australia. By comparison, Melbourne’s and Brisbane’s median property values are at AUS $708,000 and AUS $525,380 respectively. With prices higher than the AUS $612,200 median property value of Australia, market analysts believe Sydney’s real estate market will continue to rise due to the following factors:

  • Rising Population of Sydney. It is estimated that Sydney’s population will hit 5 million in 2016. In 2014, Sydney gained 84,230 people. It also absorbed 77% of the population increase of New South Wales.
  • Declining number of available single detached housing especially in the outer suburbs of Sydney.
  • Continued inflow of foreign investment from China, Hong Kong and Singapore. From 2014 to 2015, China invested US$ 24.3 Billion in Australia’s property market. Majority of these investments have been earmarked for Sydney.
  • Good quality of life. Sydney continues to be ranked among the best places to live in the world. It was #5 in the Quality of Life Index by Monocle magazine in 2015.

The significant news in the property market recently was the reduction in the cash rate by the Reserve Bank of Australia from 2.00% to 1.75% or by 25 basis points. The policy was meant to stimulate Australia’s sluggish economy which recorded an inflation rate of 1.3%.

This was welcome news for those with current mortgages and certainly encouraging for those who are planning to buy real estate property in Sydney.

But with property values in Sydney already among the most expensive in the world, the upside may be limited. Thus, with stricter lending measures, you should remain conscientious in your efforts to find the best properties to invest in Sydney.

If you have a higher spending budget and want a home closer to Sydney’s Central Business District or CBD, these are among the best places to consider:

  • Surry Hills. This is an affluent suburb located just within one kilometer from Sydney’s CBD. Surry Hills offers a pleasant mix of commercial, residential and industrial areas. It is widely considered as the fashion wholesale district in Sydney. The Australian School of Music’s Sydney Campus can be found in Surry Hills.
  • Darlington. This is a small inner city suburb located three kilometers south of Sydney’s CBD. The University of Sydney to the north of Darlington was established in 1850. Abercrombie St. in Lawson St. is the primary commercial area in Darlington and it houses several cafés, bars, restaurants and shopping centers.

On the other hand, if you have a limited budget and unsure of your future stream of income, the following suburbs in Sydney have a median property value of AUS $300,000:

  • Mt.Druitt. It is located 43 kilometers west of Sydney’s CBD. The Westfield Mount Druitt is the main commercial center. Among the schools in Mt. Druitt are Chiffley College Mount Druitt and Chiffley College Senior Campus.
  • Blacktown. This suburb is located 34 kilometers west of the Sydney CBD. It is considered one of the most multicultural suburbs in Sydney. Its commercial district is located close to its railway station. There are many schools in Blacktown; a mix of government – run primary schools and public schools. There are also two Catholic high schools: Nagle College for girls and Patrician Brothers College Blacktown for boys.
  • St. Mary’s. This suburb is located 45 kilometers of Sydney’s CBD. Its main shopping district is on Queen Street and features famous fast-food franchises, bakeries, cafés and supermarkets. Among the schools in this suburb are St. Mary’s Primary School, South St. Mary’s Public School and St. Mary’s High School.

Then you have the suburbs that appear to have the best potential for high returns in the face of the much-talked about property bubble. Properties in these areas can offer you good returns within the year and presents ideal buying options for first time home buyers:

  • Tempe. Located nine kilometers south of Sydney’s CBD, Tempe’s main commercial district is at the Princes Highway. Among the schools in Tempe are Tempe High School and Tempe Public School. It also houses Tempe Recreational Reserve which includes a netball court, football fields, cricket pitches and a jungle gym for children.
  • Dulwich Hill. This suburb is located 7.5 kilometers south west of Sydney’s CBD. It has two shopping areas: Wardell Road and the northern end of Marrickville Road and its intersection at Canterbury Road. There are three primary schools in Dulwich Hill: Dulwich Hill Public School, St. Maroun’s College and St. Paul of the Cross.
  • Kingsford. Kingsford is located seven kilometers of Sydney’s CBD. It is primarily a residential area and situated directly south of University of New South Wales. It has a private school in St. Spyridon College which is near the Greek Orthodox Church on Gardener’s Road.
  • Potts Point. This is a small and densely populated subdivision which is located just three kilometers of Sydney’s CBD. Potts Point is considered one of Sydney’s main entertainment centers. It has many popular pubs, restaurants and nightclubs. There are a number of good schools in Potts Point such as St. Vincent’s College, Plunkett Primary School and St. Andrew’s Cathedral School.
  • Parramatta. This suburb is considered a major commercial business district and is located 23 kilometers of Sydney’s CBD. It houses Church Street which is renowned for some of the best shops and restaurants in Sydney. There are several good schools in Parramatta such as The Arthur Phillip High School, Parramatta High School and Our Lady of Mercy College.

Considering where prices are right now and the favorable interest rate, conditions are ideal to invest in Sydney real estate property. Sydney’s economic fundamentals remain strong and in combination with tight supply should continue to push property values higher.